Bolstered by new financial projections that show a massive influx of taxes, the Republicans on the Wisconsin’s legislative Joint Finance Committee voted to do the right thing – give the money back. More precisely, they voted to never collect the excess taxes in the first place by lowering tax rates for the people paying the bills. Especially after a very tough year for so many Wisconsinites, the Republicans’ respect for taxpayers is laudable.
The largest proposed tax cut is a very simple cut in the state income tax for most taxpayers. Wisconsin is one of 41 states that continues to impose an income tax. Wisconsin’s income tax is progressive in that it is divided into four brackets and taxes at progressively higher rates as people’s income increases. The Republicans focused their income tax cut at the largest bracket.
Under the Republican tax cut proposal, individuals earning between $23,930 and $263,480 and married couples earning between $31,910 and $351,310 would see their tax rate reduced from 6.27% to 5.3%. That bracket covers the majority of Wisconsin’s income taxpayers and directly impacts the middle class by letting them keep more of their hard-earned money. The proposed income tax cut would allow a large percentage of taxpayers to keep a total of $2.75 billion of their money instead of sending it to Madison for politicians to spend. That is $2.75 billion that will be put into Wisconsin’s economy and directly benefit families and businesses throughout the state. The second tax cut that Republicans put into the budget is a reduction in property taxes by $650 million over the biennial budget. This tax cut proposal is more of a shift than a real tax cut. The budget would push more state taxpayer spending to technical colleges and local schools through the state equalization aid formula but would require those government units to reduce their property taxes by a total of $650 million. The budgetary maneuvering would not reduce aggregate state and local government spending, but it does secure federal COVID relief money for schools while also extending a property tax decrease for taxpayers.
All told, the two tax cuts inserted into the budget add up to $3.4 billion is tax relief for a wide swath of taxpayers. According to lawmakers, the average Wisconsin taxpayer would see $1,200 in tax savings over two years. That is $900 in income tax savings and $300 in property tax savings. That is real money left in the pockets of real Wisconsinites.
The Republican tax cuts were added to the proposed state budget after all of the state government’s government programs had been funded and spending increased. The Republicans voted to increase spending on schools; on higher education; on law enforcement; on shared revenue; on almost everything. The Republicans are advancing a budget that increases spending throughout state government and spends more overall than any other budget in the history of the state of Wisconsin. All of the taxpayers’ commitments have been met – and then some.
Yet, despite unprecedented spending, the state is still projected to collect record high taxes. The state government is already going to collect all of the taxes it needs to pay for the record spending. All the Republicans are doing is what any honest cashier would do when a customer accidentally hands them a $20 instead of a $10. They are giving the taxpayers their change back.
The Democrats, on the other hand, want to take those record taxes and spend them or redistribute them. In their world view, every dollar spent by a politician in Madison is better spent than if it were spent by a farmer in Allenton or a teacher in Brillion. It is a philosophy rooted in arrogance and avarice.
For this reason, Governor Tony Evers is likely to use his powerful line-item veto to veto part or all of the tax cuts. If he does veto the tax cuts, the money will still not be appropriated to spend on anything. It will merely be collected by the government to create a surplus for a future legislature and governor to spend or return. Evers would be taxing excess tax money from taxpayers for no other reason than because he could.
Wisconsinites can do far more good for their families, businesses, and churches with $3.4 billion and any politician in Madison ever could. Let us hope that Governor Evers cares more about Wisconsinites than some of his fellow Democrats in the Legislature who voted against the tax cuts.