Some millionaires pay lower taxes than minimum wage earners in Wisconsin

A 2011 tax change by Walker and the GOP has cost more than a billion despite talk of eliminating it

Foxconn's groundbreaking ceremony in Wisconsin in June 2018, brought out then-U.S. House Speaker Paul Ryan, President Donald Trump, then-Gov. Scott Walker, Foxconn Founder and CEO Terry Gou and Christopher Murdock. The company can receive cash payments from the state because it has other refundable tax credits. It has no taxes to reduce because a manufacturing tax credit virtually eliminated them. (Photo courtesy of White House/Creative Commons)

Thanks to a little-known big ‘MAC’ tax credit, a minimum wage worker serving Big Macs could pay more in state income taxes than a profitable corporation making millions in Wisconsin. Despite lots of talk by Democrats in the last election about eliminating or reducing this tax break, the recently signed state budget does nothing to change it.

The Manufacturing and Agriculture tax credit (MAC) reduced the state tax rate for certain corporations to nearly zero. This also means the state must make cash payments to some of these companies, such as Foxconn, because they have other refundable tax credits but have no taxes to reduce because MAC virtually eliminated them.

In Gov. Tony Evers proposed budget, he capped the credit for well-heeled manufacturers (the small percentage going to agriculture would have remained untouched) and redirected revenues  ($280 million in 2020 and $237 million in 2021) toward the middle class and struggling workers and families. Republicans rejected it.

By the end of 2019, the total cost of the MAC to the rest of Wisconsin taxpayers will exceed $1.3 billion according to the Legislative Fiscal Bureau.  It results in lost state revenue that is more than double original projections of $128 million when fully phased in; in fiscal year 2019 it cost $334 million according to the Wisconsin Budget Project

“It became pretty clear to us early on that there would be no changes from Republicans in certain key areas in this budget and this was one of them,” said Assembly Minority Leader Gordon Hintz. “It’s more expensive than anyone ever thought it would be, but any reconsideration would be admitting it was a reckless decision and they won’t admit they made a mistake.”

Midnight budget surprise

In 2011 — former Gov. Scott Walker’s first budget — MAC was slipped into a wrap-up budget motion designed for miscellaneous adjustments. It was sprung late at night for an immediate vote with no public hearing. And it shocked observers that such a costly tax break, primarily benefiting the wealthy, was being slipped in after months of Walker repeating that Wisconsin was “broke,” and he therefore had no choice but to make draconian cuts to K-12 schools and the UW System.

Republicans, including Walker, Assembly Speaker Robin Vos and Senate Majority Leader Scott Fitzgerald, have all argued that the tax break is necessary because it will create jobs and “reward job creators.” However, the MAC has no job-creation requirement. In fact, a company can claim the credit even if they lay off workers or send jobs overseas, said Tamarine Cornelius, an analyst with the Wisconsin Budget Project.

She looked at manufacturing jobs created in the wake of the MAC and found Wisconsin grew more slowly than the national average. Quarterly census data shows that between March 2013 and March 2018, the number of manufacturing jobs in Wisconsin grew by 4.0 percent, below the national growth rate of 5.2 percent. (Manufacturing workers in Wisconsin also earned $9,800 less than the national average.)

“In Wisconsin we have a tilted tax structure that favors the wealthy,” Cornelius said. “This [credit] is a big piece of a larger pattern in the budget … people who are wealthy pay a smaller share of their income in state and local taxes. Gov. Evers proposed several changes that would reduce that tilt that favors the wealthy — this manufacturing credit being one of them. He wanted to have the top pay more and use that money to pay for the middle class tax cuts. He would have nudged it back a bit. What we got at the end was a middle class tax cut, no change to the top and people paying a little more at the bottom.”

Another way to look at the MAC’s effectiveness is to compare job creation data between Wisconsin and neighboring states with similar economies. Urban Milwaukee’s Bruce Thompson, in his column Data Wonk, compared Wisconsin to Minnesota, Iowa, Illinois, Michigan, Indiana and Ohio and found little difference over time between them even after Wisconsin implemented its tax break.

Very little protest

Tax credits are certainly not sexy. And manufacturing and agriculture are as sacred as, well, cows to the Wisconsin economy. Perhaps that accounts for why there has not been an outcry over MAC even though 80% of it is taken by claimants making more than $1 million per year. Those with adjusted gross incomes of $30 million or more do even better with each receiving an average of $2.2 million using the MAC in 2019.

“This poorly designed tax credit had one clear outcome: to give huge sums of money to a small number of wildly rich individuals,” Hintz said. “We need to keep talking about this tax credit because the long national period of economic growth masked its impact on the budget because revenue was increasing. At some point we are going to have a recession and need to make tough decisions and I don’t think most people on the street would say this is a good thing.”



  1. It isn’t accurate to say that there hasn’t been an outcry over the just hasn’t been heard over the very loud voices of Wisconsin Manufacturers and Commerce lobbyists and their pet legislators, Robin Vos, Scott Fitzgerald, Alberta Darling, and John Nygren. With Darling and Nygren as cochairs of Joint Finance, all potential discussion is nipped in the bud. Thanks for highlighting the issue here.

  2. Excellent piece with great insights and data that most of Legislature–including many Democrats–refuse to confront.

    Worse than the MAC alone: Wisconsin already was shelling out $1.53 billion in a typical year prior to the enactment of the MAC, according to the NY Times at

    Then we add in the subsidies for Foxconn –estimated at $4.5 billion in state and local funds–and we can see a non-stop torrent of funds from the pockets of ordinary Wisconsin families to the largest corporations. Much of the entire program of tax subsidies is not linked directly to job creation in Wisconsin, as Citizen Action of Wisconsin has repeatedly reported based on state data.


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