MADISON -- Wisconsin’s working poor with two-or-more kids would get a tax increase under a budget measure endorsed by the Legislature’s Finance Committee. Majority Republicans also pushed through some tax breaks for business and investors, as the panel began its final week of rewriting Governor Scott Walker’s state budget for the next two years.
The most controversial change yesterday was to the state’s Earned Income Credit for the working poor. Assembly G-O-P co-chair Robin Vos said the credits were among the highest in the country – and they had to be cut to help eliminate the state’s budget deficits. Vos said the panel wanted to increase the Earned Income Credit for single mothers, while reducing it for larger families. He said many who get the credit don’t work, so they’re not technically paying higher taxes.
But Milwaukee Assembly Democrat Tamara Grigsby protested the cuts by saying quote, “We hate poor people – We kick them while they’re down.” And she said they’ll never get the chance to improve.
The committee also voted to roll back some of the 2009 tax hikes for multi-state corporations under the combined reporting law. And they voted to let people defer state taxes on long-term capital gains if they’re re-invested in a Wisconsin business. If the investment is held for five years, no taxes would be owed. Currently, 30-percent of capital gains are exempt from taxes.
Also, brewers would be prohibited from buying wholesale beer distributorships. And a company owned by Philip Morris got a break when lawmakers agreed to tax smokeless tobacco by weight instead of its price. Critics said U-S Smokeless Tobacco would get an unfair advantage, because its products are far lighter than other brands. But a company official said lower-priced brands currently get a bigger tax break. The tobacco measure would not reduce taxes overall.