Joint Finance Budget Reduces Taxes and Fees by $677 Million

MacIver News Service | June 13, 2013

[Madison, Wisc…] The 2013-2015 state budget passed by the Joint Committee on Finance (JFC) last week will reduce taxes and fees on Wisconsinites by $677 million according to a new memo from the non-partisan Legislative Fiscal Bureau (LFB).

Net taxes in the state will decrease by $684.9 million, a majority of which comes from Rep. Dale Kooyenga’s (R-Brookfield) income tax cut. The income tax cut will provide $647.9 million in total tax relief. The Committee increased Governor Scott Walker’s income tax cut by more than $300 million.

The income tax cut passed by JFC will decrease rates for all brackets, reduce the amount of brackets from five to four, and change or delete about 20 tax credits.

On top of the income tax cut, the JFC budget will provide $30 million for a private school tuition tax credit, $8.5 million for individuals to carry forward operating loss deductions on their taxes up to 20 years, and $5.5 million to expand the veterans and surviving spouses tax credit.

The Committee’s budget also reduces taxes on small businesses by eliminating the economic development surcharge on farms, partnerships, and individuals, which will provide $16 million in tax relief.

The new budget bill also creates a sum sufficient GPR appropriation of not more than $30 million that will cover the interest owed to the federal government for the State’s Unemployment Insurance (UI) debt. This appropriation is estimated to save Wisconsin businesses $26 million over the biennium.

JFC voted to reduce the handgun purchaser record check fee as well, which is estimated to save Wisconsin sportsmen $860,000.

Members of the Committee did pass some tax increases. The Committee voted to update the state’s tax code to match the federal tax code for income and franchise tax purposes, resulting in an estimated $33.7 million increase. Proponents claim this will make state and federal taxes more similar, which will lower the costs to prepare them.

The new version of the budget also modifies the veterans and surviving spouse credit to phase out high-income claimants, and limit the amount of property taxes that can be reimbursed to $2,500. This provision will increase revenue by $15.7 million.

Businesses that have a very high rate of laid off employees will also see an increase in tax rates due to the increased cost for UI benefits to their unemployed workers. Increased UI tax rates for these companies, beginning in 2015, will raise state revenue by $18.8 million.

The budget proposal from JFC also increases net fees in Wisconsin by $7.7 million. Joint Finance voted to increase the OWI driver improvement surcharge by $70 for each offense, increasing revenue by $1.9 million. The bill also will increase revenue by $3.8 million by adding a DNA analysis surcharge of $250 for all felony convictions and $200 for all misdemeanor convictions.

Each County Register of Deeds will see a fee increase for records that are filed with their office, raising state revenue by $2.6 million.

There will also be an increase in fees for facilities that emit air pollutants under the JFC budget. These facilities that are subject to federal regulation delegated to the DNR under the Clean Air Act would see $3.7 million in additional fees.

Assembly debate on the budget begins on Tuesday. The full memo from LFB can be seen here.