In one of its final actions on the state’s two-year funding plan, the Wisconsin Legislature’s budget committee on Thursday approved a more than $300 million income tax cut over the next biennium.
The figure, paired with a separate reduction in a standalone bill that members of the Joint Finance Committee also voted to pass, would cut income taxes by more than $450 million over the period -- in addition to an already existing $60 million cut in 2019 under current law.
The actions mean that come tax year 2020, Wisconsinites would see an income tax reduction of $136 on average, according to initial estimates from the nonpartisan Legislative Fiscal Bureau.
“We can do the tax cut without losing our priorities, I think that’s really important,” JFC Co-chair Alberta Darling, R-River Hills, told reporters ahead of the votes, adding: “We don’t have to raise taxes in order to fund our priorities.”
Under the budget proposal, approved 12-4 along party-lines, income tax revenue would decrease by more than $150 million per year, a level that would target middle-income earners. In all, 62 percent of tax filers would see a tax decrease averaging $75 in 2019, according to LFB.
That’s less than the more than $400 million income tax decrease each year in Gov. Tony Evers’ own plan, a fact Democrats seized on to draw a contrast between it and the GOP proposal. The Republican effort follows a separate GOP-backed cut that cleared the Legislature earlier this session and was vetoed.
Evers’ plan, which he included in his budget, would have been funded through the state’s surplus funds and cap an existing income tax credit for manufacturers. In all, the average filer would have seen a decrease of $216 in 2019, per LFB estimates.
"The People’s Budget puts more money back in the pockets of hardworking families. The Republican budget protects giveaways for millionaires. I think the people deserve better," Evers wrote in a tweet.
Sen. Jon Erpenbach, D-Middleton, slammed the Republican effort as inadequate, saying Evers’ proposal is the most fair route.
“We believe the people who really truly need the breaks get them, and it’s a lot of people,” he said.
In all, between the income tax cut in the Republican budget and separate reductions that were included in a standalone bill members also approved on Thursday, the average filer would see a tax reduction of $75 in the first year of the budget and $136 in the second year.
The separate, standalone legislation that passed the committee with unanimous support deals with the collection of online sales taxes.
Specifically, it would clean up language in a previously passed bill that cleared the way for the state to collect sales taxes on online purchases. The new legislation would expand the number of those transactions that would be subject to the tax, with the funding going toward a reduction in the two lowest tax brackets.
The original bill's language aimed to reduce income taxes by $61 million in tax year 2019. That's a decrease of, on average, $27. While the changes Joint Finance Committee members approved today don't change those figures, they shift the tax relief onto the two lowest income brackets.
Meanwhile, the bill also added language that would impact 2020. In all, it would reduce income taxes that year by an average of $136 million, per LFB estimates.
In other actions Thursday
Property tax cut: Republicans voted to funnel nearly $60 million through the state’s lottery tax credit in order to lower property taxes.
The move would free up more money in the appropriation for distribution as a property tax credit.
E-cigarettes and vapor products: Republicans voted to pare back Evers’ proposed excise tax on e-cigarettes and vapor products.
Evers sought to impose a tax of 71% of the manufacturer’s list price and generate an estimated $34.7 million in the next two years.
But the GOP plan would generate an estimated $5.5 million over the biennium, as it would impose a tax of 5 cents per milliliter on the volume of the liquid in the vapor products.
The motion also wouldn’t raise taxes on “little cigars,” which Evers wanted to tax at the rate of normal cigarettes, a move that would bring in an additional $6.8 million over the biennium.
The budget now heads to the state Assembly and Senate, where members in both chambers will vote on the spending plan. After that, it heads to Evers' desk.