By SCOTT BAUER, Associated Press
MADISON (AP) — The Republican-controlled Wisconsin Senate sent a middle-class tax cut bill to Democratic Gov. Tony Evers on Wednesday, setting the stage for what is likely to be the new governor’s first veto.
The proposal is the first bill passed by the Legislature this session. Republicans moved quickly to pass the proposed $340 million-a-year tax reduction to get ahead of Evers, who campaigned on a promise to cut middle-class taxes by 10 percent and planned to include such a plan in the state budget he introduces in two weeks. Democrats blasted the Republican plan as a stunt.
Although Republicans and Evers both want to reduce taxes for middle-income earners, they can’t agree on how to pay for such a change. Both sides have said they would be willing to compromise, but neither has shown signs of budging in an early test of how they will govern.
Evers did not immediately promise to veto the bill, but repeated that he intended to use his budget to put forward his own alternative plan to reduce income taxes.
“We need to get this done for the people in our state, and I hope that Republicans in the Legislature will set politics aside and work with me to get this done,” Evers said in a statement.
Republicans haven’t large enough majorities in the Senate and Assembly to override an Evers veto without Democratic support. That could force them to compromise with Democrats on the tax cut in the budget.
Senate Minority Leader Jennifer Shilling said that although it was “refreshing” that both sides were talking about cutting taxes for the middle class, it was too early to talk about it now before Evers has introduced the state budget. Committing budget reserves to pay for the Republican tax cut now and counting on future revenue growth to pay for it in later years is irresponsible, she and other Democrats argued.
Republican Senate Majority Leader Scott Fitzgerald urged lawmakers to commit to returning money to taxpayers now before it gets committed to other priorities.
“We’ve got to continue to nip away at Wisconsin’s high taxes,” Fitzgerald said.
The Republican bill would tap budget reserves, a step Evers opposes because it would take the money off the table for other spending priorities and could not be repeated in subsequent years. Instead, Evers wants to all but eliminate a tax credit that effectively removes the state income tax for manufacturers. That would pay for about half of his $415 million tax cut. He hasn’t identified how he would fund the remainder.
Republicans oppose Evers’ plan, calling it a $220 million tax shift onto manufacturers that would stifle economic growth. Democrats cast the tax credit as a giveaway to millionaires and say there’s no evidence that it’s been as beneficial to the economy as Republicans argue.
The Assembly passed the GOP income-tax plan with no Democratic support on Tuesday, sending it to the Senate. It also passed there on a party-line vote; all Republicans in that chamber voted in support and all Democrats against.
Under the Republican bill, the maximum deduction would increase by 20.6 percent for single people making less than $127,000 and joint filers making less than $155,000. The average cut for all filers would be $170, according to the nonpartisan Legislative Fiscal Bureau.
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. It would also expand the earned-income tax credit for lower income filers. The average tax cut under his plan would be $225, Evers’ office said.