Robot Arm:
It depends on what you consider relevant. The long message I posted detailing the various income shares of the population was based on federal data, and the information I’ve been using about public union wages and benefits is based on national data, not Wisconsin’s data. I consider it relevant because Wisconsin is only the first of many states to have to fight this battle, so looking at the larger picture is entirely valid.
I suspect the ‘Liar’ charge comes from my claim that it’s impossible to balance the budget on the backs of the rich. This resulted in the use of very big fonts by a couple of posters, which suggests to me they got rather riled up by this.
One claim by Try2B Comprehensive was that only $137 million needs to be raised, and that can be done with a tax surcharge on the rich - implying that my statement was false. In fact, this $137 million number has been flying all over the liberal blogosphere from what I can tell, but it’s a total non-sequitur - it looks to be a specious talking point injected somewhere along the way to make the problem look much smaller than it is.
So what is that number? The $137 million is simply the current budget shortfall that needs to be raised to pay the existing bills. It is NOT the projected budget deficit. Putting a temporary surtax on the rich might raise that money, but then Wisconsin will have an even bigger shortfall next year and the year after. So it’s highly misleading to use this number as if it’s the only problem that needs to be solved.
Also, the esteemed Rachel Maddow made outright false claims about this, according to Politifact.
Or put another way - what that $137 million budget ‘deficit’ is is just the deficit between now and June 30 of this year when the current fiscal year ends.
The projected two-year deficit for Wisconsin is still 3.6 billion dollars ( a number mentioned at the bottom of Try2B Comprehensive’s own cite). That’s the gap that has to be closed, because the states can’t print money like the federal government can. Using that $137 million number as the problem to be solved is highly disingenuous.
So using the numbers in that cite, it says that a 1.5% income surcharge on the ultra rich would raise 168 million dollars. That would mean the ultra-rich have an annual income of about 10.6 billion dollars. Of course, they also pay 6.75% in Wisconsin state tax, and have an effective federal tax rate of about 23%. One of the misleading things about a ‘surtax’ is that it’s applied to pre-tax income, so the rate can be made to look low.
But if you’re looking at a long-term solution, you have to consider how much money the rich still have after taxes. In this case, they’re paying around 30% of their income in state and federal taxes. That leaves them with about 6.4 billion dollars a year in after-tax income. If you want to close the budget deficit on the backs of these people, you’ll have to take an additional 25% of their after tax income. That’s quite the hike in state taxes.
If my off-the-cuff math is correct, that would be a marginal tax rate increase from 6.75% to about 21%. That number could be slightly off because of the details of the Wisconsin tax system I don’t know about, but the general scale is right - you’d have to more than triple their state income tax. And if you want to increase federal taxes on the rich as well, suddenly you’re talking about a massive increase in taxes on the rich. Not just an increase back to ‘Clintonian’ levels.
This budget document shows that Wisconsin in total raises about 6.1 billion dollars per year in personal income taxes. The budget shortfall is 1.8 billion dollars per year for the next two years. If you want to raise taxes to pay for that, it’s a hell of a tax hike. If you wan to limit that raise to just the rich, it’s a draconian tax hike.
It’s important to remember that states are very constrained in how much they can raise in income taxes - especially among the most mobile members of the population. The transfer of wealth between states is very easy, and there is significant capital flight taking place between states with high taxes and those with low taxes. If Wisconsin tried to extract 3.6 billion dollars from its richest citizens, I think it would find that a lot harder to do than you’d think. If the new 21% state tax causes some people to leave and others to engage in more tax-avoidance activity, then you still won’t close the gap, and the marginal rate would have be even higher. But you’ll rapidly run into diminishing returns long before then.
So yes, I stand by the statements I made in this thread.