A fifth-generation Wisconsinite, Dave grew up in a family business, seeing firsthand the barriers to success big government places in front of small business. Hired out of college as an aide to Congressman Paul Ryan, Dave worked the next nine years helping Ryan advance the cause of limited government and the free enterprise system - while also holding a job in the private sector. Elected to represent the 83rd Assembly District in a special election in May of 2011, Dave has fought alongside Governor Walker to put Wisconsin's economy back on track, balancing the budget for the first time in over a decade, enacting concealed carry legislation and helping lead the fight against ObamaCare in Wisconsin. Before his election, Dave also served in various leadership positions in his church and also served on the Village of Big Bend Board of Trustees. In his free time, Dave enjoys spending time with his family, hunting and bowfishing. Dave and his wife, Amy, make their home in the Town of Vernon with their five children.
Friends, an important issue that I plan on advocating for during the upcoming budget process is that of ending the marriage penalty Wisconsin taxpayers are subject to. Just after Christmas I submitted a commentary piece to the Racine Journal Times on this issue and would like to share that piece with you.
Wisconsin Should Divorce Marriage Penalty
By State Representative David Craig
Wisconsin faces many serious challenges in the upcoming biennium, chief of which is how the state tackles policy focused on helping job creators expand the state’s economy. One of the best ways that the legislature can help job creators is by reforming and simplifying our state’s unnecessarily complex tax code. Mindful that approximately 90% of businesses in Wisconsin are taxed as individual taxpayers, lawmakers also need to focus on inequities under the current code. One of the main inequities under current law is Wisconsin’s “marriage penalty” tax which negatively impacts approximately 49% of our state’s married couples.
If you are married, you may have noticed this inequity when you were filing your 2011 taxes this year. The penalty can affect a married couple’s net income in one of four ways; 1) as joint filers they are not able to double the School Property Tax Credit; 2) they must file under the narrow tax brackets for joint filers; 3) they are not able to double the standard deduction as joint filers; and 4) their retirement income is not included in the Married Couple Credit (MCC) calculation.
Here is how it works. When a couple that is not married files separately, their tax brackets are calculated using their respective, separate incomes and their standard deductions and credits are calculated separately. A married couple, however, files jointly, meaning their tax bracket is calculated using their combined income total, and their standard deductions and credits are calculated for one filing instead of each individual receiving their own deductions and credits if they had filed separately. This inequity only increases if the married couple is separated but not divorced. In addition, retired, married couples are not able to include retirement income when calculating the MCC.
While joint filing may seem to reduce paperwork for couples and the state, the net result is that married couples and separated married couples are economically disadvantaged by the tax code. Because fixing this inequity would require changing a complicated tax code, previous lawmakers created the MCC as a “quick fix” to offset these penalties. However, simple calculations show that creating yet another tax credit instead of addressing the underlying issue was insufficient and further complicated the already onerous task of filing.
The end result is that our tax code effectively penalizes married couples and creates an economic incentive for couples not to marry, or possibly to divorce if they are separated. Given the many benefits of marriage for families and for society as a whole: socio-economic benefits, stable families, etc. — it does not make sense for the state to economically disincentivize marriage in the tax code.
It is clear that real tax code reform and simplification are necessary for aiding businesses still ailing from a struggling economy. However, as we consider how to reform our tax code, our mantra should be to “first, do no harm” by correcting this anti-family tax policy. We have several options to address this disparity in the tax code and I look forward to working with Governor Walker and my legislative colleagues to enact an effective solution. Doing so will fulfill our moral obligation to address the marriage penalty and fix this tragic inequity. Clearly, it is not in the best interest of the state or our employers to penalize the most important and fundamental institution in our society; the family.