In addition to the manufacturing and agricultural tax credits, higher income tax filers in Wisconsin next year will also begin reaping the rewards of broad exemptions on capital gains — money made from stocks, bonds, real estate or other investments.

Right now, Wisconsin exempts 30 percent of capital gains on assets held at least one year and allows 100 percent exclusion for gains on the sale of business assets to a family member. Walker's budget makes all capital gains free from state income tax as long as the money is reinvested in a qualified Wisconsin business for at least five years.

Of course, capital gains tax cuts overwhelmingly benefit those at the top. According to the Legislative Fiscal Bureau, almost 80 percent of taxpayers with incomes over $200,000 reported some capital gains income, while only about 20 percent of all taxpayers with incomes below $200,000 reported any. For the vast majority of taxpayers, the only significant capital gain in their lifetime comes from the sale of a house — and that gain is already exempt from state and federal taxes up to $250,000.

Once fully phased in over the next several years, capital gains tax collections would fall by more than $100 million annually, the fiscal bureau estimates.