Shutting low-income families out of the tax cut will further skew Wisconsin’s tax system, which already requires people with low incomes to pay a higher share of their incomes in state and local taxes than people with much higher earnings. The lowest 20% of Wisconsin households by income, in which households earn less than $22,000 per year, pay 10.1% of their income in state and local taxes, according to an analysis by the Institute for Taxation and Economic Policy. In contrast, the top 1% of households by income—a group with incomes of $513,000 and above—pay only 7.7% of their income in state and local taxes.
The tax cut also will widen racial disparities in the economic well-being of Wisconsin households. White households get a significantly larger tax cut on average than Black or Latinx households. Historical and present-day racial discrimination in Wisconsin’s schools, health care system, and job market have lowered the wages of Black and Latinx households, making them more likely to be among the low-income households that are excluded from receiving a portion of this tax cut.