Senate Republicans working toward tax cut proposal to include more middle-income earners

MADISON – Top Senate Republicans are developing a proposal to cut income taxes by widening the state's second tax bracket to include more middle-income earners, Senate Majority Leader Devin LeMahieu told reporters Thursday.

The discussion follows months of back-and-forth between legislative Republicans and Democratic Gov. Tony Evers, as well as between the two GOP-led legislative chambers, over how best to distribute tax cuts as the state is set to end the 2023-25 budget cycle with a $4 billion surplus.

The Oostburg Republican said he's working with Joint Finance Committee co-chair Sen. Howard Marklein of Spring Green to draft "something we’re confident the governor could sign."

LeMahieu shared broad strokes of the proposal at a Wispolitics.com luncheon in Madison but said details are still being finalized.

Evers partially vetoed a provision in the 2023-25 state budget that would have reduced all four income tax brackets and focused relief on the state's wealthiest residents. The top tax rate of 7.65% would have been reduced to 6.5%, which amounted to a 15% reduction for the top earners in the state who earn as a married couple $405,550 or more annually. The third bracket, which covers a broad range of married filers who earn between $36,840 and $405,550 annually, would have been reduced by about 17%, from 5.3% to 4.4%. Evers vetoed both changes.

The governor kept in place reductions for the second tax bracket, which covers those who earn $36,840 and less as a couple. That rate went from 4.65% to 4.4%, and the lowest rate slightly reduced from 3.54% to 3.5%.

Evers said before the budget-writing cycle began he would not sign into law tax cuts for top earners in the state but instead wanted a 10% income tax cut for middle-class residents delivered through tax credits.

LeMahieu suggested the range of the second bracket could be expanded to cover people who are currently at the lower end of the broad third bracket, but "we don’t have the exact number yet."

The proposal would be "something that's affordable for the state and can provide some real tax relief for the vast majority of Wisconsin families," he said.

LeMahieu also indicated the Senate would be unlikely to support a proposal from Assembly Republicans to eliminate taxes on retirement income as a way to keep Wisconsin's seniors from moving out of state. He argued that if seniors make decisions on where to live based on income tax relief, "so does the average working person," and said lawmakers shouldn't be "choosing winners and losers."

In a December interview, Assembly Speaker Robin Vos, R-Rochester, said more details would be available this month. He estimated middle-class people could expect to see a tax cut of around $1,000 to $2,000 under the plan.

"We're not going to pick winners and losers," Vos said.

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

This article originally appeared on Milwaukee Journal Sentinel: Senate Republicans working toward compromise tax cut proposal