Assembly committee holds hearing on Republican tax cut proposals

A day after releasing their $2.9 billion tax cut proposal Assembly Republicans held a public hearing on the legislation, with a plan for a committee vote as soon as next week.

“We are in a unique situation here in Wisconsin with a multibillion dollar surplus,” said Rep. David Steffen (R-Green Bay), testifying before the Assembly Ways and Means Committee, “and is our belief as authors that we return that surplus to people.”

The legislation, AB-386, would cut the income tax rate on the state’s second-highest tax bracket to 4.4% from its current 5.3% on incomes ranging from $27,630 (for a single filer) to $405,550 (for joint filers).

Steffen testified that the income tax cut accounts for about the two-thirds of the bill’s total cost. The remainder is for a provision that would make retirees’ income tax-exempt up to $100,000 for single filers and $150,000 for joint filers. Steffen said 98% of Wisconsin residents over 67 or older would pay no state income taxes on their retirement accounts as a result.

Both Steffen and Sen. Rachael Cabral-Guevera (R-Appleton) stressed that rising prices in the last couple of years made the proposed tax breaks even more important.

“If you’re listening to the people that you represent, I don’t think this is a one party or another party issue,” Cabral Guevera said, “This is across the board,” with taxpayers “asking for their hard work to be appreciated and their funds to be returned.”

Steffen said four states — Iowa, Illinois, Mississippi and Pennsylvania — have similar laws in place to exempt retiree income from income taxes.

Rep. John Macco (R-Ledgeview), the committee chair, said he was confident that the size of the cut would not leave the state with a shortfall in the future from which it would have to recover, but that it would be important to confirm as much.

“I think we’ve done the due diligence to make sure that we don’t turn into Kansas because if you remember when they did their tax adjustments, they overshot and had to go back in and backpedal. I just want to make sure that that’s not happened.,” Macco said. In 2012 Kansas passed legislation that eliminated taxes for hundreds of thousands of businesses and slashed personal income tax rates. The state rolled back the cuts five years later.

Legislative Fiscal Bureau analysts testified that without any tax revenue growth, the cut would leave the state with a structural deficit of $2.3 billion, but that projected increases in revenue from income taxes, sales taxes and other sources could make up that difference.

There was no opposition testimony at the hearing, nor at the following hearing on AJR-66, a proposed constitutional amendment that would require a supermajority of the Legislature to approve any future tax rate increases.

The committee is scheduled to vote on both measures on Wednesday, Sept. 6, Macco said.