Gov. Tony Evers pledged on Wednesday to veto a Republican tax cut proposal that GOP lawmakers expect to pass in the Assembly early next week. His vow came after he rejected a similar proposal when he signed the state budget in July.
Evers’ rejection of the Republican plan highlights the continuing fight over what to do with Wisconsin’s $4 billion surplus. Republicans have been calling for large tax cuts while Evers has called for increased spending on schools, health care and child care.
“I’m not going to sign an irresponsible Republican tax cut that jeopardizes our state’s financial stability well into the future and the investments we need to be making today to address the real, pressing challenges facing our state,” Evers tweeted Wednesday.
I'll veto it. Plain and simple.
— Governor Tony Evers (@GovEvers) September 6, 2023
I’m not going to sign an irresponsible Republican tax cut that jeopardizes our state’s financial stability well into the future and the investments we need to be making today to address the real, pressing challenges facing our state.
The plan he said he’d veto would cut the tax rate from 5.3% to 4.4% for people in the state’s third tax bracket, a broad category covering individuals earning between $27,630 and $304,000 and married filers earning between $36,840 and $405,000.
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The proposal, Assembly Bill 386, would also remove taxes on up to $100,000 in retirement income from, for example, 401(k) and pension accounts that people age 67 or older receive. That amount would be up to $150,000 for married couples who are both at least 67.
When Republicans proposed the $2.9 billion tax cut in late August, Evers spokesperson Britt Cudaback pointed to a State Budget Office memo stating that tax reductions exceeding $430 million in the next two years could lead the federal government to recoup more than $2 billion that Wisconsin received from it during the COVID-19 pandemic.
Evers on Wednesday said the latest proposal would put Wisconsin “on a path to bankruptcy.”
Spokespeople for Assembly Speaker Robin Vos, R-Rochester, didn’t immediately respond to a request for comment.
In July, Evers vetoed Republicans’ proposal to lower the third tax bracket’s rate from 5.3% to 4.4%. He also rejected reducing the 7.65% tax rate covering individuals earning more than $304,000 or married filers earning more than about $405,500 to 6.5%.
Evers’ budget included a GOP provision to lower the 3.54% rate covering individuals earning less than $13,810 per year or married filers earning less than about $18,400 to 3.5%. He also signed a measure lowering the 4.65% rate covering individuals making up to $27,630 and joint filers earning $36,840 to 4.4%.
As a result, Republicans’ proposed $3.5 billion tax cut turned into a $175 million cut.
Under the tax plan Evers modified, those making between $40,000 and $50,000 will receive an average $36 tax cut.
Under the GOP plan Evers said he would veto, taxpayers making between $40,000 and $50,000 would receive an additional $52 cut.
Under the current structure, taxpayers making between $60,000 and $70,000 — or near Wisconsin’s median household income of $67,000 — will receive a $44 income tax cut. Under Republicans’ plan, they would receive an additional $205 cut.
Those making between $90,000 and $100,000 will receive a $48 cut under Evers’ plan, less than 10% of the $515 cut they would receive under Republicans’ plan.
Wisconsinites making between $200,000 and $250,000 will receive an average $51 cut per year under the plan Evers signed. Under Republicans’ tax plan, they’d save an additional $1,650.
Assembly Republicans are likely to pass the tax cut on Tuesday.