May 13, 2021, by Tamarine Cornelius
Last week the budget committee of the Wisconsin legislature removed a provision from the state budget that would have provided health insurance to almost 100,000 Wisconsin residents with low incomes, while saving the state more than a billion dollars in tax revenue over the next two years. On the same day, the committee preserved a tax cut that funnels millions of dollars into the pockets of a small group of the extremely wealthy who have rigged the system for their own benefit. This combination of actions demonstrates the legislature’s priorities so far in the budget process: making it more difficult for people with low incomes to meet their basic needs, while refusing to accept proposed changes that would require big corporations and the top 1% to pay their fair share.
In his 2021-23 state budget — a budget designed to address inequities facing Wisconsin’s rural families and families of color — Governor Evers proposed that Wisconsin expand BadgerCare, a health care coverage program for low-income Wisconsin residents. Expanding BadgerCare would allow 91,000 additional adults with low incomes to get coverage. Right now a single parent who works full time and has one child earns too much to get BadgerCare if they make $8.38 an hour. More than half the people who would get covered by expansion are currently uninsured, and many of the rest are enduring significant financial hardship to afford insurance.
The coverage gains alone should make expanding BadgerCare an open-and-shut case. But there is also a strong financial case for BadgerCare expansion, including:
- More than $300 million in state savings for BadgerCare every year, due to increased federal cost-sharing;
- An upfront bonus of more than $1 billion, due to a provision in the American Rescue Plan that provides a new financial incentive for states to expand health care coverage; and
- $100 million per year for hospitals that serve BadgerCare participants, due to increased federal cost-sharing.
(Read our blog post, BadgerCare Expansion Won’t Go Away — It’s Too Good a Deal, for more about the compelling financial case for expansion.)
On the same day that the budget committee refused the Governor’s recommendation to expand BadgerCare, it also turned down the Governor’s proposal to rein in a tax credit that gives enormous tax cuts to the very highest earners and shuts out virtually everyone else. The Governor’s proposal would save the state about $240 million a year. The Manufacturing Credit is so slanted that most of the credit that is paid through the individual income tax goes to millionaires. In 2017, there were 11 tax filers among those who claimed the credit, each of whom had incomes of $30 million or more. Those 11 tax filers got an average tax cut of $2 million each.
All businesses and families in Wisconsin need the same things in order to thrive: safe communities, a solid transportation network, excellent public schools, accessible health care, and affordable higher education. These priorities require the investment of public resources. But this tax credit allows manufacturers to pay little or nothing in income taxes towards these costs. Instead, other businesses and residents pick up the tab.
Companies do not need to create new jobs to claim the credit. Even manufacturers that lay off workers, send jobs overseas, and close factories can get this tax break. (Our blog post, Six Reasons to Eliminate Wisconsin’s Costly, Ineffective Manufacturing Tax Credit has more information about this wasteful, costly loophole.)
Wisconsin needs a budget that invests in the fundamental building blocks for growth and future prosperity: our children, families, schools, health, and equitable communities. By voting down BadgerCare expansion, Wisconsin lawmakers made it harder for people to see a doctor when they need one, and to provide for their families. By voting down limits on a tax cut for the ultra-wealthy, lawmakers continued to provide special benefits for a tiny group of high earners, making it harder for the state to make meaningful investments in infrastructure, education, and communities. These votes threaten to further perpetuate Wisconsin’s status as having among the worst economic and racial disparities in the nation. And by voting down those changes on the same day, lawmakers on the budget committee sent a message that their goal is to reinforce an economy that systematically marginalizes Wisconsin residents with low incomes, and uses resources to enrich only a few.