Evers Proposes 12 Tax Cuts or Hikes

Gov. Tony Ever. (Joe Timmerman / Wisconsin Watch)

Democratic Gov. Tony Evers has proposed a budget that would significantly change Wisconsin’s tax system, with 7 different tax cuts and 5 tax hikes that together would lower taxes for lower and middle incomes taxpayers, while hiking them for the most wealthy individuals and for manufacturers.

Republicans aren’t impressed. Senate Majority Leader Devin LeMahieu called Evers’ tax cuts “gimmicky,” and Assembly Speaker Robin Vos said Republican legislators will put Evers’ budget aside and build their own budget. That budget will again include an income tax cut totaling more than $1 billion, Republicans promised, despite past Evers vetoes of major cuts like that.

“We want to have broad tax cuts that cover every Wisconsinite,” Assembly Majority Leader Tyler August said on WISN-TV’s UpFront show. “We think that our plan will be big and bold enough that conservatives can get behind it, but also targeted to the middle class.”

Instead, Evers offered a much more targeted approach: Let’s cut income and sales taxes, and offer local governments aid if they control property taxes, in a variety of ways.

“I’m proposing $2 billion in tax relief for Wisconsinites, including tax cuts for middle-class families, seniors, veterans, homeowners, and renters,” Evers said last week, pitching his plan in statewide stops. “Wisconsinites have made it loud and clear they need a little extra breathing room in their household budgets.”

Let’s consider what taxes Evers wants to cut and how the state Department of Administration (DOA) scores each of them:

-Raising the $700 personal exemption claimed when you file your income taxes to $1,200. That $500 increase would save taxpayers $225.9 million by mid-2027.

-Ending the 5% state sales tax on home electricity sales, a two-year savings of $155.6 million.

-Boosting the Homestead Tax Credit, saving homeowners $147.8 million.

-Raising the Earned Income Tax Credit claimed by low-income working residents would mean $106.9 million more for them.

-Expanding tax breaks for veterans and their spouses would save them $89.4 million.

-Ending the sales tax on over-the-counter medicines would be a projected saving of $70.6 million and ending that tax on diapers, feminine hygiene and incontinence products would save an additional $35.3 million.

-No longer taxing tips would save workers who rely on them $13.6 million over the next two years.

Now consider the tax increases that Evers wants enacted, some of which previously have been rejected by GOP legislators:

-A 9.8% income tax rate for taxpayers with taxable incomes of more than $1 million, which DOA says would bring in $1.29 billion more by mid-2027. The highest tax rate now is 7.65% for couples with taxable incomes of more than $420,420 and single taxpayers with incomes of more than $315,310. A Fiscal Bureau summary says three out of every 1,000 taxpayers had taxable incomes of more than $1 million in 2022.

-Limiting a manufacturers’ tax credit Republicans passed more than 10 years ago to $300,000, which would generate $792.3 million.

-Limiting the tax break for profits on capital gains investments to $400,000 for individual taxpayers and $533,000 for couples, netting state government an additional $420 million.

-Taxing the sale of recreational marijuana, which the Legislature would have to first legalize, could bring in an estimated $58 million in the second year of the budget.

-A new tax on “vapor” products (electronic devices used to inhale nicotine) could bring $41.4 million.

If he runs again for reelection, Evers would have to defend his proposed tax increases. According to page 150 of DOA’s budget summary, those “revenue enhancements” total $2.3 billion, while the tax cuts – or “tax relief measures” – total $894 million. If so, that’s not a $2 billion tax cut, which Republicans may jump on.

As for the tax cuts, Vos compared them to “chocolate cake,” saying they are all good. However, he said his caucus is working on broader tax cuts that “people can actually feel.”

“My preference is something that is ongoing and meaningful to families,” Vos said.

Evers, in turn, criticized Republicans for their opposition to his plan. “It defies logic that Republicans would oppose my plan while having no comprehensive plan of their own to help lower costs for folks across our state,” the governor said.

Republicans also criticized a non-budget change Evers again proposed that would replace the word “mother” in state laws with phrases like “parent who gave birth” and “inseminated person.”

That’s an “outright attack on the very essence of motherhood,” said Republican Rep. Amanda Nedweski, who has two children.

Steven Walters started covering the Capitol in 1988. Contact him at stevenscotwalters@gmail.com.