Here & Now

Todd Berry Discusses Income Tax Cut

Frederica Freyberg:

Get ready for a little more cash in your pocket because the budget writing committee nearly doubled the income tax cut proposed in Governor Scott Walker’s budget. It totals out to a $651 million tax cut. The way it works, the tax rates would be cut in all five earning brackets, but two brackets would be combined at the same rate. So, for example, married couples filing jointly whose taxable income is between roughly $28,000 and $315,000 would be in the same bracket, paying 6.27% in taxes, compared with the current rate of 6.75% at the high end and 6.5% on the lower end. The bottom line? People with taxable income of $28,000 and those with income of $315,000 will pay the same percentage in taxes. The average tax cut would be a little over $150 a year, much less for low-income earners, more for high-income. All this tax talk leads us to Todd Berry, president of the Wisconsin Taxpayers Alliance, and thanks for being here, Todd.

Todd Berry:

As always.

Frederica Freyberg:

So as a tax expert, what is your reaction to this income tax cut?

Todd Berry:

Well, to stipulate a few things. We have a big income tax. We’re about 26% above the national average. So you can see why people care about income taxes. We’re also that much above on property taxes. So you can see why people care about that. We did have a big increase in 2009, so some people think we should cut it. You know, on the flip side, my concern is simply that we look before we leap, because we’ve had a long history in the state of, when we get news about tax revenues being up a little bit, we immediately commit the money, whether we spend it or we cut taxes with it. And then we end upholding the bag a year or two later. And I hope that’s not the case. But I don’t think legislators understand that the estimates they get are really guesses. And they can be off easily by 1% or 2%. And that’s enough to dry up the money.

Frederica Freyberg:

And then, because these tax cuts would presumably be in law, you’d have to go in and make cuts elsewhere to programs.

Todd Berry:

Probably. And that’s exactly the argument about being cautious, is that in the end, if you get caught as we did in 2007, ’08, ’09, we ended up increasing taxes a lot, and then going through some very painful cuts. So there’s a downside to this rolling the dice that people forget.

Frederica Freyberg:

Well, in fact, you told me on this program about a month and a half ago that you were puzzled why, after going through that gut-wrenching kind of budget fix two years ago, we would flirt with potential deficit problems now. Now, do you think we’re actually flirting with deficits?

Todd Berry:

Well, if you believe the revenue estimates, and we do have a reasonably good surplus right now, we should squeak through. But, you know, this economy has been so unpredictable for so long. You know, one quarter it will be good. The next quarter it will be flat. I wouldn’t be hanging my hat on trying to estimate the economy or tax revenues with any certainty.

Frederica Freyberg:

In fact, you have also said that, in your mind, there are economic indicators specific to Wisconsin that would suggest that Wisconsin might go into another recession in the next two years.

Todd Berry:

Mm-hmm. Mm-hmm.

Frederica Freyberg:

So divulge. What are those indicators?

Todd Berry:

Well, that was a couple months ago, and the numbers change every month, but, you know, whether you look at employment data or GDP data, whatever it is, Wisconsin is just sort of hanging in there. You know, we’re growing a little bit, according to GDP numbers. We’re pretty flat, according to job numbers. So that doesn’t tell you that we’re, you know, suddenly going to surge. And what people forget is, we actually were doing better than the nation and better on tax revenues a year or two ago, because we always lead the country out of recessions and we always lead the country into recessions.

Frederica Freyberg:

Here we are kind of just bumping along. Todd Berry, sorry for the short time. Need to leave it there. Thanks very much.

Todd Berry:

My pleasure.