The Cap Times: Vance touts Trump tax cuts in Wisconsin; experts see more pain than gain
- Vice President JD Vance visited La Crosse on Thursday to sell the ways President Donald Trump’s federal tax cuts are said to benefit families and businesses. But Wisconsin economists and tax policy experts say slashed public benefits will cost working-class families more than the tax decrease will help.
- “I don’t think that the math adds up, because the tax reductions are very modest for people with low incomes,” said Andrew Reschovsky, professor emeritus of public affairs and applied economics at the University of Wisconsin-Madison La Follette School of Public Affairs.
- …most people won’t actually notice a change and a lot of these provisions are not new, according to Ross Milton, an economist at UW-Madison who specializes in federal tax policy.
- “The biggest piece of the bill is making permanent policies that were passed during Trump’s first term that were set to expire at the end of this year. Those included modest cuts for the middle class and large tax cuts for high-income households and business owners,” Milton said.
- “The main beneficiaries of tax reductions will be the very rich and wealthy,” the economist said. “The middle class will get modest tax cuts, and on the other side, they will face the broader consequences of the tax bill.”
- “It kind of pales in comparison to the tax cuts that are being extended that primarily benefit high-income households,” Milton said…
- Households with an annual income between $460,000 and $1 million would see their taxes cut by an average of about $21,000, or 4.3% of their after-tax income, according to the Tax Policy Center, a joint group by the Brookings Institute and the Urban Institute.
- Meanwhile, households with an annual income of $35,000 or less would see a tax cut of less than 1%, or an average of $160.
- The more concerning aspects of the legislation lie in the cuts to federal assistance programs, Milton said.
- The federal spending bill has come under scrutiny for requiring deep cuts to public benefit programs including Medicaid and federal food assistance, called FoodShare in Wisconsin.
- Analysis from the nonpartisan Congressional Budget Office projects that a total of 276,175 Wisconsin residents will lose health care coverage under both the Affordable Care Act and Medicaid over the next decade.
- In Wisconsin, Medicaid programs cover about 1 million residents, or 20% of the state’s population, according to the Wisconsin Department of Health Services. This includes coverage of about 40% of births, 40% of children and 60% of people in nursing homes, according to the DHS.
- But Reschovsky said Wisconsin residents who are supported by those programs aren’t likely to see enough of a tax break to make up for the loss in programming.
- “At the bottom of the income distribution, the net impact is actually negative,” [Reschovsky] said. “People will be absolutely worse off, because many of them will lose food stamps, Medicaid coverage, health insurance coverage, which is really a daunting fact.”
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