Assembly Republicans are proposing a 10 percent income tax cut for middle-class Wisconsinites in what they say is an effort to help Democratic Gov. Tony Evers deliver on one of his campaign promises — but Evers isn't jumping on board.
The Republican proposal would use a budget surplus to expand the sliding scale standard deduction for the individual income tax to give "targeted relief to the middle class," said state Rep. Terry Katsma, R-Oostburg, in a news conference announcing the plan.
Assembly Republicans held six press conferences throughout the state to highlight the proposal, which would cost $490 million in its first year and an estimated $338 million per year after that. As of June 30, the state's general fund had a positive balance of $588.5 million based on cash accounting.
Evers campaigned on cutting middle-class income taxes by 10 percent, but his proposal was tied to scaling back the state's manufacturing and agriculture tax credit, which reduces the state income tax for manufacturers and agricultural producers.
"Why jeopardize what has brought us to this point of prosperity by undoing a tax cut that brought us to today?" said Rep. John Nygren, co-chair of the Joint Finance Committee, when asked why Republicans oppose funding the individual income tax cut by capping the manufacturing and agriculture credit.
Democrats have long argued for an end to the credit, noting that more than three-quarters of it was projected to go to people earning more than $1 million per year in 2017.
Supporters of the credit argue it has helped stanch the loss of manufacturing jobs from the state and helped some businesses grow. Republicans say capping the credit would amount to a tax increase for farmers and manufacturers who currently receive it.
According to an analysis of the Assembly Republican proposal by the nonpartisan Legislative Fiscal Bureau, the average decrease would be $170 per year for individuals and $231 per year for married couples filing jointly. Married couples making between $60,000 and $70,000 per year would see the largest cut at $311.
Senate Majority Leader Scott Fitzgerald, R-Juneau, said in a statement that he has asked three Republican senators to work with the Assembly on the proposal.
"Governor Evers’ past statements in support of tax relief give me hope that we can work together to continue to lower the tax burden. Together, we can keep making Wisconsin the best place in the country to work, live, and raise a family," Fitzgerald said.
Assembly Speaker Robin Vos, R-Rochester, said Republicans introduced the plan on Thursday so the governor could include it in his upcoming State of the State address, scheduled for Jan. 22. Evers has said he will include his tax proposal in the state budget, but Vos said he wants the Republican plan to be passed outside of the budget process.
"What a fantastic chance for (Evers) on Tuesday to say, 'I accept the offer of legislative Republicans to be able to use the surplus they developed' for the tax cut that he wants," Vos said. "Seems like a win-win to me."
A statement from Evers spokeswoman Melissa Baldauff did not indicate the governor would be taking Republicans up on the offer.
"Governor Evers campaigned on creating a fairer tax code for working Wisconsin families and that is a promise he will keep in his budget. It's great to hear that Republicans agree with another one of the governor's good ideas to support middle-class families, however, their proposal falls short of what Gov. Evers has proposed," Baldauff said in a statement.
Baldauff argued Evers' proposal is more sustainable because the individual income tax cut is funded by capping the manufacturing and agriculture tax credit, rather than relying on a budget surplus.
Nygren said Assembly Republicans are confident state revenues will continue to grow in a manner that would continue to fund the cut.