Vos: Liam Beran
From left: Tony Evers and Robin Vos.
Although that sound you hear coming from Washington is Elon Musk’s chainsaw of spending and federal employee cuts, Democratic Gov. Tony Evers proposed a 20% jump in all-funds state spending by mid-2027.
That spending jump would be one campaign issue next year, if the Democrat seeks a third term. But Republicans would also challenge how Evers wants to change the tax code, according to the two-year budget he gave legislators two weeks ago.
There’s some curious budget math for a governor who said he will announce this summer whether he will seek a third term.
His spending increase would more than wipe out the projected $4.3 billion budget surplus and invite a general-fund debt by mid-2029. And, it would be paid for by tax increases over two years that total $2.3 billion, although $894 million of that would be offset by tax cuts.
After Evers called for that spending hike, Republicans took turns saying, “Read our lips. It won’t happen. We will ignore the governor’s new spending. Our budget starts with line-by-line reviews of current spending, and why those should be increased.”
Republicans who control the Legislature also vowed to again put an income tax cut totaling more than $1 billion on the governor’s desk, despite past Evers vetoes of major cuts like that.
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, which DOA’s budget summary calls “revenue enhancements,” 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 could bring $41.4 million.
Assembly Speaker Robin Vos told reporters the Legislature’s budget won’t raise any taxes. Assembly and Senate GOP leaders are working on another significant income tax cut, he added.
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.
