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Gov's Budget Means Smaller Checks, Tax Breaks for Working Poor

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MADISON, Wis. (WTAQ) - Wisconsin’s working poor would get smaller checks and tax breaks under Governor Scott Walker’s proposed state budget.

The Republican Walker plans to reduce the earned income tax credit to save $41 million over the next two years. And Walker’s critics say it goes against his promise not to raise taxes.

The governor’s budget would also freeze the Homestead credit for low-income homeowners and renters. That’s after Democrats voted 2 years ago to adjust it each year for inflation. That would save $8 million over the next two years.

Walker says he’s not raising taxes by cutting the earned income credit, because most people who get it don’t pay state income taxes – and they still get a check from the state. Walker says he’s just reducing what they get from other taxpayers.

But 23 percent of those who get the earned income credit do pay state taxes. And Jon Peacock of the Wisconsin Council on Children and Families says it would be a tax hike for them. Peacock says a state budget is about priorities – and Walker wants to give tax relief to the wealthy and multi-state corporations while cutting programs that help a broad range of Wisconsinites.

The state’s earned income credit was started in 1989 by Republicans as an incentive for poor people to get off welfare and work. The credit was meant to provide a small wage boost, and off-set things like Social Security taxes.

Todd Berry of the Wisconsin Taxpayers’ Alliance says it’s good tax and social policy because it rewards work rather than discouraging it like welfare did. And Berry said he would have looked for savings somewhere else.

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