Senate votes for tax cut, with likely veto
MADISON - Republicans and Democrats in Wisconsin agreed on the outlines of an income tax cut for the middle class, but they’re nowhere near a deal they can finalize to put money in people’s pockets.
The Senate voted 19-14 Wednesday on a GOP version of the tax cut, with all Republicans for it and all Democrats against it. The Senate approval for the measure came a day after the Assembly signed off on it on party lines.
The plan now goes to Democratic Gov. Tony Evers, who opposes the deal because of its long-term effect on the state’s finances.
He’s all but said he will veto it. Republicans, meanwhile, say they won’t ever accept Evers’ proposed tax cut because it would scale back a tax break for manufacturers. That puts the two sides in a standoff that could result in nothing getting done.
The tax fight will continue for months. If Evers vetoes the GOP plan, as expected, the battle will resurface in the coming weeks as Evers and GOP lawmakers take up the state budget.
Evers is to introduce his budget on Feb. 28. Republicans will rewrite it over the following months. Evers will have the final say on the budget, which he can reshape by using his veto powers to strike out provisions, dollar figures and individual words.
Evers has been tweeting criticism of the GOP plan, but he came short this week of promising to veto it.
In a statement after Wednesday’s vote, Evers said he “will not be taking immediate action on the proposal” and would include his own plan for cutting taxes in his budget.
“Cutting taxes for middle-class families shouldn’t be a Republican issue or a Democrat issue — it’s something we should all be able to agree on, and there’s a way to do it responsibly without costing taxpayers more in the long run,” his statement said.
Dueling tax plans
The Republican plan would give taxpayers $490 million in its first year and $338 million annually after that, according to the nonpartisan Legislative Fiscal Bureau.
In the short term, Republicans would rely on a projected surplus of nearly $700 million to pay for the tax cut.
Evers’ plan would provide more than $440 million in tax relief this year to lower- and middle-class people while increasing taxes by more than $220 million on manufacturers.
Taken together, the plan would reduce state tax collections by about $219 million this year, according to the Evers administration.
In addition to the tax break for the middle class, Evers’ plan would expand the earned income tax credit, which provides the working poor with tax breaks or cash payments.
On the Senate floor, views on the measure fell along party lines, with Republicans emphasizing the tax cut would go to people of average means.
“This isn’t for millionaires,” said GOP Sen. Alberta Darling of Rivers Hills. “This isn’t for trillionaires . ... It’s not for the rich. It’s not for the super-rich. It’s for the middle class.”
Senate Majority Leader Scott Fitzgerald of Juneau said the Republican plan would put money in the pockets of middle-income families. “That’s significant,” he said. “That’s real.”
Democratic Sen. Jon Erpenbach of Middleton called the tax cut irresponsible because the surplus will cover its costs initially but not in future years.
“It’s like finding twenty dollars in your pocket and saying, ‘Oh my God I’ve got to spend it now,’ “Erpenbach said.
Evers has said his plan is fiscally sound because it has less of an effect on the state’s bottom line. He has said his budget would detail how to fund the rest of his proposed tax cut.
Evers wants the tax cut to be taken up as part of budget deliberations instead of now. Some Republican senators agree with that principle.
GOP Sen. Luther Olsen of Ripon before the vote said he would rather deal with the tax cut as part of the budget because lawmakers would know how much money they had to spend on schools and state programs.