Wisconsin Republicans bring back tax cut legislation for third time
MADISON, Wis. (AP) — Republican legislators are trying one more time to pass a tax cut plan before they head home to campaign even though Democratic Gov. Tony Evers has vetoed their last two proposals.
Assembly Speaker Robin Vos and Senate Majority Leader Devin LeMahieu unveiled their latest proposal Tuesday during a state Capitol news conference hours before Evers was set to give his annual state of the state address. They both said Wisconsin’s tax code is too harsh compared with neighboring states, driving people to leave for places such as Florida and Arizona.
“It’s so vitally important for us to reduce Wisconsin’s tax code,” LeMahieu said. “Since people are mobile it’s important that we finally use our incredible surplus that we have for taxpayers and give it back to the hardworking families of Wisconsin, to make sure our economy continues to grow, that people invest in Wisconsin and want to stay here and we can have a great state for everyone.”
Republicans have repeatedly called for tapping the state’s surplus — which now stands at about $7 billion — to deliver tax relief. But Evers has stymied them each time they have tried to pass legislation.
The governor used his partial veto powers in July to reduce a $3.5 billion income tax cut plan the GOP included in the state budget to just $175 million, which equated to a $3- per-month reduction for the average taxpayer. He vetoed another plan in November that would have delivered $2 billion in tax cuts by expanding the tax exemption on retirement income, creating a child care tax credit and cutting income taxes.
Evers spokesperson Britt Cudaback said the governor would review the bills and would emphasize “real, meaningful solutions” to the state’s workforce shortage during his state of the state speech.
Evers has said in the past that the other GOP plans don’t do enough to help the middle class, so it would seem almost certain he will veto the latest proposals if they reach his desk.
The legislation introduced Tuesday closely mirrors the plan Evers killed in November. This time, however, Republicans have packaged the proposals as individual bills rather than a single all-encompassing measure. Vos said the move is designed to give Evers choices.
One bill would expand the state’s second income tax bracket to cover higher earners. Right now, single filers who make between $14,320 and $28,640 and married joint filers who make between $19,090 to $38,190 fall in the second bracket. That means they face a 4.4% tax rate. Singles who make between $28,640 and $315,000 and married couples who make between $38,190 and $420,420 are in the 5.3% third bracket.
The legislation would expand the second bracket to include single filers who make between $14,320 and $112,500 and married joint filers who make between $19,090 and $150,000. The change would result in income tax savings of nearly $795 million in fiscal year 2024-2025 and about $750 million annually thereafter, according to the Legislative Fiscal Bureau.
Another bill would increase the income tax credit for married couples from a maximum of $480 to $870 beginning in tax year 2024.
A third bill would expand the state child care tax credit to 100% of the claimants’ federal child care tax credit. Currently filers can claim only 50% of the federal credit on their state taxes. The amount of maximum eligible expenses under the state credit would grow from $3,000 to $10,000 for one qualifying dependent and from $6,000 to $20,000 for two or more dependents.
The last bill would update the state income tax withholding tables from tax year 2022 to 2024, including the second bracket expansion. The move would reduce state income tax collections by $439 million in fiscal year 2024-25.
All in all, the bills would cost the state about $2 billion in lost tax revenue in 2024-2025 and about $1.4 billion each year thereafter, according to the fiscal bureau.
The bills come as the two-year legislative session races toward its final days in February. Even if Evers vetoes their latest tax cut proposal, Republican lawmakers can boast on campaign stops that they tried to deliver tax relief but the governor stood in the way. Announcing the package ahead of the state of the state address gives them a chance to seize headlines ahead of the speech.
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