State Republicans Pass Package of Tax Cuts

Thursday, February 15th, 2024 -- 12:00 PM

(Shawn Johnson, Wisconsin Public Radio) Republicans in the Wisconsin Assembly have passed a package of tax cuts that would reduce income tax collections by roughly $1.4 billion per year, with targeted cuts for retirees, married couples and parents.

According to Shawn Johnson with Wisconsin Public Radio, taken as a whole, the bills would largely spend down the remainder of the state’s historic budget surplus, though it remains unclear whether Democratic Gov. Tony Evers will sign them.

The largest of the tax cuts would expand the state’s second lowest income tax bracket, so that people who earn more money would pay lower rates. Right now, the bracket covers earnings between $14,320 to $28,640 for individuals and $19,090 to $38,190 for married couples.

Under the GOP bill, it would expand to cover earnings up to $112,500 for individuals and $150,000 for married couples. The tax rate for people who get the cut would go from 5.3 percent down to 4.4 percent.

Republicans acknowledged that their plan would largely use up the state’s surplus, which is projected to be more than $3 billion at the start of the next budget cycle.

“Let’s stop holding this multibillion dollar surplus as a slush fund here in Madison, which can only be used to grow government,” said Rep. Nik Rettinger, R-Mukwonago, “and instead return it back to the taxpayers it belongs to.”

Democrats said the plan would wipe out Wisconsin’s surplus and leave a deficit, making it harder to fund expenses like education in future deficits. Rep. Tip McGuire, D-Kenosha, said Republicans were forcing Evers to be the “adult in the room.”

“He’s going to have to be the one who’s responsible. He’s going to be the one that saves you from yourself,” McGuire said. In addition to the income tax cut, the bills Republicans passed Tuesday would cut taxes in a few different ways.

The second-largest plan would cut taxes on retirees 65 and older by excluding the first $75,000 of retirement income subject to state taxes. For married couples, the bill would exempt the first $150,000. The average tax cut would be $1,582.

Another plan would increase an existing nonrefundable tax credit for married couples from $480 to $870. GOP backers say the change reflects what the original tax credit would have grown to had it been indexed to inflation.

The fourth GOP tax cut would expand the state credit for child and dependent care expenses to 100 percent of what someone claims on their federal income tax return. Right now, the state credit only covers up to 50 percent of the federal credit.

When broken down, the Legislature’s nonpartisan budget office said the income tax cut would cost the state about $750 million annually, the retiree tax cut would cost about $470 million, the married couple tax credit would cost more than $160 million and the child care tax credit would cost about $70 million.

Republicans passed all four as separate bills, rather than as a single proposal.  Evers has not said whether he will sign or veto the GOP tax cuts. During an interview that aired Sunday on WISN-TV, Evers said he had reviewed all the plans.

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