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Republican tax cut bill heads to Evers for likely veto

February 14, 2019
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Wisconsin Gov. Tony Evers voices opposition to a Republican-authored income tax cut bill, saying he favors his plan which would all-but eliminate a manufacturing tax credit, Tuesday, Feb. 12, 2019, in Madison, Wis. (AP Photo/Scott Bauer)

MADISON, Wis. (AP) — The Republican-controlled Wisconsin Senate sent a middle-class tax cut bill to Democratic Gov. Tony Evers on Wednesday, setting up what is likely to be the new governor’s first veto.

The measure is the first bill passed by the Legislature this session. Republicans moved quickly to pass the $340 million-a-year tax cut to get ahead of Evers, who campaigned on a promise to cut middle-class taxes by 10 percent and planned to include it in the state budget he introduces in two weeks. Democrats blasted the Republican plan as a stunt.

While Republicans and Evers both want to cut income taxes for middle income earners, they can’t agree on how to pay for it. 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 reiterated that he intended to propose his income tax cut plan in his budget.

“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 don’t have 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.

Democratic Senate Minority Leader Jennifer Shilling said that while it was “refreshing” that both sides were talking about cutting taxes for the middle class, it was premature to talk about it now before Evers has introduced the state budget where it can fit into the larger two-year spending plan. 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 the money gets committed to other priorities during budget debate later this year.

“We’ve got to continue to nip away at Wisconsin’s high taxes,” Fitzgerald said.

The Republican bill taps budget reserves, a move Evers opposes because it takes that money off the table for other spending priorities and is not sustainable in future years. Instead, Evers wants to all but eliminate a tax credit program 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 cut plan with no Democratic support on Tuesday, sending it to the Senate. It also passed there on a party-line vote, with all Republicans in support and 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.

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Follow Scott Bauer on Twitter: https://twitter.com/sbauerAP

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