Gov. Jim Doyle announced a $2.3 billion tax reduction for Wisconsin taxpayers Friday through the Making Work Pay Credit, a part of the federal stimulus package.
The tax credit is set to start in April and averages $506 per Wisconsin family. The credit is phased out starting at incomes exceeding $75,000 and is refundable, making it available to those with no tax liability, according to a statement from Doyle's office.
""The Making Work Pay Credit cuts taxes for millions of workers in the state and will provide a much-needed financial boost to Wisconsin families,"" Doyle said in the statement.
According to Carla Vigue, spokesperson for Doyle, the American Recovery and Reinvestment Act includes job creation and funding for education. The tax credit will mean ""a little extra money in the pockets"" of working families.
""Each family can make their own decision, but it's basically, you know, 500 extra dollars each year for families to be able to either pay their bills or go out and spend in the economy,"" she said.
Extra spending money could be essential to generating income for businesses, according to Cynthia Jasper, UW-Madison professor of consumer science. Jasper said consumers have cut back on spending and many businesses are on the brink of survival.
""This is really an excellent idea in terms of generating and stimulating the economy, which is crucial and needs to be done as soon as possible,"" she said.
According to Andrew Reschovsky, UW-Madison professor of public affairs and economics, stimulus bills usually result in people spending more money, and could help generate more jobs.
The tax credit will help increase money in the local economy, create more business, and result in hiring more workers, Reschovsky said.
Reschovsky added that although no economist can predict how the higher paychecks will affect spending, it should not be long before money from the tax credit is put back into the economy.
""Part of the design of this [stimulus] was to put money back into the economy quickly,"" he said.
