The Republican tax-cut plan would use about $340 million of the state’s $589 million surplus to target tax relief for middle-income earners. #wiright #wipolitics Click To TweetMacIver News Service | Jan. 17, 2018
By M.D. Kittle
MADISON — Pulling a page from the Bill Clinton political manual, Assembly Republicans on Thursday unveiled a tax-relief package that Speaker Robin Vos is billing as the “(Gov.) Tony Evers middle-class tax cut.”
“We actually have this huge surplus that’s been generated and rather than allowing it to stay in Madison and grow government we prefer to keep Tony Evers’ campaign promise and make sure we have the ability to do a middle-class tax cut,” Vos said.
The proposal would use about $340 million of the state’s $589 million surplus to target tax relief for middle-income earners. It would amount to more than $300 in annual tax relief for the average median income family in Wisconsin, according to lawmakers.
And Republicans are using one of Democrat Evers’ biggest campaign promises in pitching the tax-cut package.
“We actually have this huge surplus that’s been generated and rather than allowing it to stay in Madison and grow government we prefer to keep Tony Evers’ campaign promise and make sure we have the ability to do a middle-class tax cut,” Vos (R-Rochester), said during a Capitol press conference Thursday morning. Assembly Republicans unveiled the plan simultaneously at several locations around the state.
Evers campaigned on a similar $340 million tax-cut plan for individuals earning no more than $100,000 a year and families making no more than $150,000.
But the governor doesn’t care for the Republican Assembly plan. Evers’ spokeswoman Melissa Badauff said GOP proposal “falls short” of what the governor wants to do.
“Governor Evers campaigned on creating a fairer tax code for working Wisconsin families and that is a promise he will keep in his budget,” Badauff said. “It’s great to hear that Republicans agree with another one of the governor’s good ideas to support middle-class families, however, their proposal falls short of what Gov. Evers has proposed.”
What Evers has proposed is rolling back a popular tax credit for manufacturers and farmers that has definitively spurred the state’s accelerated economic growth.
Republicans compared Evers’ “political response” to his quick rejection of a GOP bill that would protect people with pre-existing conditions from losing health insurance coverage, another key issue that Evers campaigned on.
The GOP’s framing of their plan as the fulfillment of an Evers’ campaign pledge smacks reminiscent of President Bill Clinton’s co-opting of Republican Party ideas, particularly Wisconsin’s successful welfare reform programs, in the mid-1990s. Republicans say they don’t care who gets the credit, as long as taxpayers get some relief.
“We’re not adding another line on our already-complex state tax return. We’re not adding paragraphs of instructions. It’s just increasing those allowances,” said Katsma.
The tax proposal would raise the state’s standard sliding deductions beginning in tax year 2020 for taxpayers in the middle-income brackets.
“We’re not adding another line on our already-complex state tax return. We’re not adding paragraphs of instructions. It’s just increasing those allowances,” said state Rep. Terry Katsma (R-Oostburg).
The plan’s thresholds go a bit farther than Evers’ campaign pledges, according to a memo from the Legislative Fiscal Bureau. The tax reduction is targeted to taxpayers with incomes below the expanded income phaseout levels of $155,413 for married joint filers and $127,408 for single and head-of-household filers, according to the fiscal bureau memo. But the vast majority of tax relief would go to taxpayers making between $30,000 to $100,000 a year, Vos said.
State Rep. Mary Felzkowski (R-Irma) said $340 a year in tax savings might be crumbs to the likes of Speaker of the House of Representatives Nancy Pelosi (D-Calif.), but it’s real money to hard-working families across the Badger State.
“It makes a difference and eases a burden,” the lawmaker said.
Evers’ has said he would scale back the state’s manufacturing and agriculture tax credit to pay for his tax relief ideas. The Republican plan holds in place credits that have spurned tens of thousands of jobs, according to a University of Wisconsin-Madison study.
The Assembly plan has support in the Senate. Sen. Dale Kooyenga (R-Brookfield) said it moves Wisconsin in the right direction as far as lowering the tax burden. Former Republican Gov. Scott Walker and the GOP-controlled Legislature have delivered more than $8 billion in tax relief over the past eight years. Kooyenga says the tax-cut proposal continues that campaign.
The senator said Evers’ hasty rejection undercuts his calls for bipartisanship and compromise.
Vos said the Legislature has two options: they can give the surplus back to taxpayers or they can choose to spend it.
“I don’t think he would want his first act as governor to be vetoing a tax cut that is 100 percent for the middle class,” Kooyenga said. “We’re going to go to work and send him a bill. There’s a lot of support for it.”
Asked whether the state will be able to afford the tax cuts in subsequent years, Rep. John Nygren (R-Marinette) said he is confident the money will be there.
“Over the last eight years we have reduced taxes on Wisconsinites by over $8 billion and yet our revenues continue to be very strong,” said Nygren, co-chair of the Legislature’s powerful budget-writing committee. He added that many of the revenue projections show an additional $1.5 billion in new revenue on the horizon.
More so, Nygren said another round of tax cuts wouldn’t adversely affect the state’s GAAP (generally accepted accounting principles) deficit, which is at its lowest level since 2001, down 58 percent since 2011.
Vos said Republicans want to see action on the bill, which will be introduced outside of the budget, within the next month. He said the Legislature has two options: they can give the surplus back to taxpayers or they can choose to spend it.
“Well, certainly, we want to give it back to the taxpayers. That’s why there is no need to raise income taxes on anybody,” the speaker said.