Assembly Republicans pass their tax plan
Assembly Republicans Tuesday passed their version of a middle-class tax cut bill that could prompt the first use of Gov. Tony Evers’ veto pen.
Lawmakers debated the measure for hours Tuesday afternoon before sending it to the Republican-controlled Senate, which plans to take up the bill Wednesday.
But Evers, who campaigned on a 10 percent cut in income taxes for the middle class, is likely to kill the bill due to a disagreement with the GOP over how to pay for it. He plans to include his own version of the tax cut in his upcoming 2019-21 budget proposal.
The Republican bill passed 61-33. It would provide an average income tax cut of $170 to about 2 million largely middle-class tax filers, and rely on one-time state surplus revenues to finance it. Several Republicans during Tuesday characterized the bill as a bipartisan effort to return excess state revenues back to the pockets of taxpayers and fulfill Evers’ vow to cut taxes.
“I think for an awful lot of folks who voted for Gov. Evers and even folks who voted for Gov. Walker that want to see us get things done, I think we have made a good faith effort to do something that is truly bipartisan,” said Assembly Speaker Robin Vos, R-Rochester.
Their plan would reduce state tax revenues by about $490 million in the second and final year of the next state budget cycle. That includes an ongoing tax reduction of $338 million plus a one-time cost of $152.1 million to account for the timing of the change.
Republicans touted their plan as a way to cut taxes for the middle class without shifting the burden onto manufacturers. Evers has called for paying for a tax cut by capping a manufacturing tax credit that almost entirely eliminates income taxes for manufacturers.
Democrats railed against the legislation for being fiscally irresponsible by protecting millionaires and diverting state revenue that could otherwise be used for improvements to public education and roads, among other things.
Asked if he’ll veto the legislation, Evers before the vote Tuesday wouldn’t say.
“I can’t understand how we can possibly use up all the surplus for this and then essentially ignore the rest of the budget,” Evers said.
The governor took to social media throughout the day to slam Republicans for leaving the manufacturing tax credit untouched, a move he described as “handouts to millionaires.”
Assembly Minority Leader Gordon Hintz, D-Oshkosh, described the bill as “Washington, D.C., style of Republican budgeting” that doesn’t take into account the long-term impact on expenditures.
Evers and Democrats earlier this month unveiled their own tax plan that mirrors the GOP plan but differs in its funding mechanism. Evers said the plan, which would provide the average taxpayer a cut of $225, will appear in his budget scheduled to be released Feb. 28.
The Democratic plan would reduce state revenue by about $892 million over the next budget cycle, but Democrats have only partially said how they would pay for it.
More than half — about $518 million — would be financed by rolling back the manufacturing tax credit to $300,000 of income. That still leaves about $374 million unaccounted for over two years.
Rep. Daniel Riemer, D-Milwaukee, previously said Democrats hope to balance the tax cut with other priorities, such as potential Medicaid expansion, as a way to finance their plan.
Republicans have characterized the plan as a tax hike for manufacturers while criticizing their opponents’ inability to fully finance it over the two-year budget cycle.
“We are never going to raise income or sales taxes as long as the Legislature, and especially the Assembly, is controlled by Republicans,” Vos said.