Dems, WMC clash over manufacturing and ag tax credit

The debate over the manufacturing and ag tax credit continued today, with WMC rushing to its defense as Dems continued to slam it as skewed toward the wealthy.

The dustup was prompted by a study from the Wisconsin Budget Project, which noted the tax credit will cut revenue by $284 million when it’s fully phased in next fiscal year. That’s more than double the $129 million the Legislative Fiscal Bureau had projected for FY 2017 when the tax credit passed in 2011.

The credit reduces the amount of income taxes businesses or individuals have to pay for any manufacturing and ag activity, though the report found about $5 of every $6 of the credits has gone to manufacturers.

The Wisconsin Budget Project said yesterday there’s “little evidence” the tax credit has boosted job growth — and that it’s largely gone to the wealthy.

But Wisconsin Manufacturers & Commerce’s Scott Manley pushed back against both points, calling the report “fatally flawed.”

For one, Manley said, the group made a “flawed contention that the credit benefits ‘millionaires.'” Many businesses, he said, are structured as pass-through entities, such as LLCs, meaning the businesses’ income is part of their owners’ individual income tax liabilities.

He also pointed to the 34,000 manufacturing jobs the state added since the credit was passed in 2011, though those jobs aren’t necessarily tied to the credits themselves.

“The report fails to account for the substantial state and local taxes generated by 34,000 new manufacturing jobs in Wisconsin, and the untold thousands of existing manufacturing jobs that have been sustained because of this credit,” he said. “The report is fatally flawed and should be disregarded as such.”

But Dems such as Rep. Gordon Hintz slammed the tax credit as “reckless and regressive.”

The Oshkosh Dem released a memo from the Legislative Fiscal Bureau showing 11 people whose income is above $35 million will get their tax liabilities reduced by an estimated $21.5 million in tax year 2017.

The LFB memo looked only at the tax credits for individuals, not corporations, and estimated that in tax year 2017, individuals will get about $209 million in tax credits.

About $33 million of that is projected to go to 1,890 people who make between $300,000 and $1 million, the income levels with the largest amounts of people projected to claim the credit.

But $161 million will go to 1,270 people whose incomes are more than $1 million, the LFB projected. And those who make less than $100,000 will get about 1.9 percent of the tax credits.

Hintz, who’s on the Legislature’s Joint Finance Committee, raised concerns over the memo’s findings, saying the tax credit isn’t tied to any job creation numbers and the money could go toward other priorities such as education.

“We knew Governor Walker’s tax cut for the wealthy was regressive and expensive, but these latest numbers are mindboggling,” Hintz said.

— By Polo Rocha,