A $2.1 billion state tax cut is headed for a vote. What's in the package and where it stands

MADISON – The state Assembly is set to vote next week on a $2.1 billion tax package that would significantly expand the state's second-lowest tax bracket to include more than 1 million Wisconsin residents earning between $19,000 and $150,000 per year, but Gov. Tony Evers is noncommital on supporting it.

The Legislature's Joint Finance Committee voted 11-4 along party lines on Wednesday to advance the four Republican bills, which were introduced late last month and are scheduled for an Assembly vote on Feb. 13.

The proposal would overhaul the state's tax system by also exempting up to $75,000 of retirees' income and expanding tax credits for married filers and for filers with children.

Altogether, the measures would cost $2.1 billion in the 2024-25 fiscal year and $1.4 billion every year afterward, according to a nonpartisan analysis from the Legislative Fiscal Bureau. The measures would reduce the state's total income tax revenue by $2 billion per year in fiscal 2024-25 and $1.4 billion per year after that, according to the Legislative Fiscal Bureau.

Wisconsin is projected to end the 2023-25 budget with a $4 billion surplus and $2 billion in its rainy day fund.

What Democrats are saying about the tax package

Rep. Tip McGuire, D-Kenosha, said he's worried the package could lead the state into a risky financial position.

"I’m worried that we would be running Illinois-style deficits. I’m worried that this would be fiscally irresponsible and that the people that would support this would be fiscally irresponsible budgeters, or FIBs," McGuire said.

It's unclear whether Evers would sign any of the proposals into law if they reach his desk.

"I haven't seen them yet. So I won't even begin to judge," Evers told reporters Wednesday when asked whether he supports the bills. "I'm always looking for opportunities to make our tax system more fair, and hopefully they're doing that, but until I see the final results, I can’t make that judgment. I don't know what it looks like. Any number of things could be put in those bills that I would not like, but we'll take a look."

Wisconsin passed a $2 billion tax cut in 2021 but newer efforts have sputtered

Evers in 2021 signed a $2 billion tax cut in the state budget, but he and Republican lawmakers have largely failed to find consensus on how to cut income taxes in the state since.

Twice last year, Evers vetoed a GOP proposal to cut the income tax rate for the state's third tax bracket, which applies to joint filers earning up to $405,000 per year. Evers said at the time he would not sign into law a tax cut for wealthy earners.

Committee co-chair Sen. Howard Marklein, R-Spring Green, said the new proposal to cut the tax rate from 5.3% to 4.4% is in response to Evers' previous vetoes.

"We know that we can take these surpluses of taxpayer funds and make strong investments, like we did in the last budget, in a lot of their priorities. We can return some of that money. Hopefully, the governor will recognize that this is a good compromise," said committee co-chair Rep. Mark Born, R-Beaver Dam. "These are real opportunities to put the money back in the taxpayers' pockets. They have overpaid."

What Republicans say the tax cuts will do

The proposals' Republican authors have said the bills are designed to make Wisconsin a more attractive place to live for families, low- and middle-income earners and retirees. During last week's hearing, some Democratic lawmakers questioned whether the bills are the best way to accomplish those goals.

"I look at tax cuts like they’re burritos. They’re all delicious," said Rep. David Steffen, R-Green Bay, during the hearing. "Maybe I only get one of them. It doesn’t mean that all those other ones are bad."

Sen. Kelda Roys, D-Madison, countered: "They may all be delicious, but they may not all be equally nutritious."

Senate Majority Leader Devin LeMahieu, R-Oostburg, told reporters Wednesday morning he expects the chamber to vote on the bills soon.

Laura Schulte of the Milwaukee Journal Sentinel contributed.

Jessie Opoien can be reached at jessie.opoien@jrn.com.

This article originally appeared on Milwaukee Journal Sentinel: What to know about a $2.1B Wisconsin tax cut headed for key votes