Indicates likely rejection of Evers’ plan of $250 million for education
Assembly Republicans are proposing to spend a portion of the unexpected budget surplus funds on a nearly $250 million personal income tax cut for state taxpayers, and nothing extra for education as Gov. Tony Evers is seeking in a special session of the Legislature.
The proposal, amounting to an average of $105 tax reduction per filer, would increase the maximum deduction by 13.2 percent for each filer type. Taxpayers would reap the extra money on their income earned this year and be realized on the taxes they file next year, according to an analysis of the Republican proposal by the Legislative Fiscal Bureau.
The tax breaks focus on low-to-middle-income earners. The cap for married couples filing jointly is roughly $145,000 and around $120,000 for those filing single, according to the LRB.
The proposal also allocates $100 million to pay down state debt and includes a $45 million personal property tax break for certain manufacturers by allowing them to exempt machinery, tools and patterns normally assessed as personal property.
Manufacturers already pay virtually zero state taxes through the Manufacturing and Agricultural Tax Credit that has removed well over $1 billion in revenue that would otherwise have gone to state funding for schools, roads and other services.
While Republicans touted their ability to return money into the pockets of taxpayers, they did not address an effort by Evers to funnel $250 million of surplus funds into the state’s public school system.
Britt Cudack, a spokesperson for Evers, said the Assembly Republicans promised to get two-thirds funding for the public school system “before they take an eight-month vacation” and still provide $130 million to reduce property taxes across the state.
In upcoming elections on Feb. 18 and April 7, 55 school districts across the state are holding voter referendums to ask for money, according to the state Department of Public Instruction.
Taxpayers have voted to raise their own taxes more than $4.5 billion since 2016 as school districts go to referendum when expenses for operations or construction rise faster than state aid.
“Unfortunately, Assembly Republicans made it clear today that they would rather break their promise to the people of our state than work together on funding our schools and reducing property taxes in Wisconsin,” Cudaback said.
Wisconsin lawmakers learned earlier this year that the state is expected to collect an extra $818 million in taxes. Roughly half of that money goes into the state’s rainy day fund, with roughly $452 million tagged as a budget surplus.
When coupled with funds already in the state’s budget surplus fund, Wisconsin is looking at an overall budget surplus of $620 million by the end of this budget cycle in June 2021, according to the fiscal bureau.
With the Assembly and Senate each slated to be in session twice more this session, the tax-cut plan will move quickly through the Legislature. It has the support of Senate Majority Leader Scott Fitzgerald, R-Horicon.
Fitzgerald said in a statement that given the budget surplus was “much higher” than anticipated and following discussions with his caucus and Assembly Speaker Robin Vos, R-Rochester, he “fully supports the direction we’re heading with this plan.”