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Evers, Republicans offer competing income tax cut plans

By TODD RICHMOND, Associated Press

MADISON, Wis. (AP) — Minutes before Republican lawmakers were to hold a public hearing on Tuesday on a proposal to reduce income taxes, Gov. Tony Evers and his fellow Democrats stepped forward with their own competing plan.

In doing so, Evers all but promised to veto Republicans’ plan. GOP lawmakers responded by saying they are opposed to Evers’ proposal to pay for lowering taxes by curtailing a tax credit that primarily benefits farmers and manufacturers. The likely outcome of it all is stalemate, even though Evers and Republicans agree that taxes on the middle class should be lowered.

Republicans, to pay for their proposal to reduce income taxes by $340 million, are arguing the state should tap its budget surplus. Evers, in contrast, would lower taxes by about $415 million and increase the benefits offered through the earned-income tax credit. About half of the money he’d need to take those steps would come from capping the benefits paid out under the state’s manufacturing tax credit.

But the plan makes no mention of where the remaining $370 million would come from. Democratic lawmakers said the answer could be worked out in a larger debate over state budget priorities.

The Republican proposal calls for increasing the maximum deduction by 20.6 percent for single people making less than $127,000 and joint filers making less than $155,000.

The average decrease for all filers would be $170, according to the nonpartisan Legislative Fiscal Bureau. Evers’ office said the average tax cut under the governor’s plan would be $225 for all filers.

The Evers plan would create a 10 percent refundable tax credit for single filers earning below $80,000 a year and married-joint filers making less than $125,000. That credit would gradually phase out for single-filers earning up to $100,000 and married-joint filers up to $150,000.

Evers also wants to increase the child credit for poor people who qualify for the earned-income tax credit. Evers wants to increase it from 4 percent to 11 percent for families with one child and from 11 percent to 14 percent for those with two children.

That change would cost the state about $26 million a year.

To help pay for it, Evers would limit to $300,000 the amount of qualified income manufacturers could claim for tax credits. Agriculture firms would not be affected. The proposal would save the state about $230 million in each of the next two years.

Democratic lawmakers introduced their proposal on Tuesday as an amendment to Republicans’ separate plan. But none of those changes is likely to make its way into the tax-reduction legislation Assembly Ways and Means Committee plans to vote on Wednesday.

Evers told reporters Tuesday, just ahead of the Republican-called hearing, that he can’t support their bill because it provides no way of paying for the proposed tax reductions over the long term. He said the state’s budget surplus should be used for other priorities and that his way is “far superior.”

“I don’t think I could possibly sign a tax cut of that type where the money going forward is not there,” he said.

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