Republicans on the state’s budget committee, in the final major act of their deliberations, approved more than $450 million in new income tax cuts that they estimate would result in an average savings to state taxpayers of about $75 this year and $136 in 2020.
They also pumped $59 million in general fund revenue into the lottery tax credit in order to lower property taxes on homeowners.
The income tax reduction, which the Joint Finance Committee approved 12-4 along party lines, is smaller than the $833 million reduction proposed by Democratic Gov. Tony Evers. But unlike the governor, Republicans would not increase taxes on large manufacturers and close other corporate tax loopholes to pay for the cuts.
Under Evers’ plan, property taxes on the median value home would increase 2% next year and 1.6% in 2020, an increase from the previous budget but less of an increase than taxpayers would see under current law. Property tax estimates for the GOP plan were not immediately available.
Republicans adopted the income tax cut in the biennial budget bill and a separate bill that would raise sales tax revenue by applying it to online purchases.
The budget provision cuts the second-lowest income tax rate starting in 2019 and reduces state tax revenue over the biennium by $322 million.
Through the changes, the state’s lowest income tax rate, which for a single taxpayer applies to the first $11,450 of taxable income, would fall from 4% to 3.76%. The second-lowest rate, which applies to income between $11,450 and $22,900, would fall from 5.84% to 4.93%. The top two rates of 6.27% and 7.65%, which apply respectively to income between $22,900 and $252,150 and above that amount, would remain unchanged.
Budget committee Democrats blasted the GOP’s plan for favoring the wealthy elite, but Republicans praised their proposal for funding conservative priorities while holding the line on taxes overall.
“We don’t have to raise taxes to fund our priorities,” said committee co-chairwoman Sen. Alberta Darling, R-River Hills.
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About 62% of tax filers under the budget plan would see an income tax reduction in 2019. Of those, nearly 90% make less than $150,000, according to the Legislative Fiscal Bureau.
Those making more than $1 million annually would get a $91 annual income tax cut under the plan, and large manufacturers would continue to pay almost nothing in income taxes, prompting Democrats to claim GOP lawmakers are perpetuating a “rigged system.”
“Your track record is give massive tax breaks to the most wealthy elite in our state,” said budget committee member Rep. Chris Taylor, D-Madison.
Evers’ 10% tax cut plan would not cut taxes for filers making more than $150,000. The average recipient under Evers’ plan would get a $217 annual cut. It would have capped a manufacturing tax credit, increasing taxes on manufacturers by about $518 million.
Evers spokeswoman Melissa Baldauff previously called the governor’s plan fairer and more progressive.
“The governor’s sustainable plan puts the needs of farmers and working families first, while Republicans are fighting to protect millionaires,” she said.
The GOP budget bill passed Thursday would also levy a new tax on vapor products, which include e-cigarettes, equaling $0.05 per milliliter on the volume of vapor liquid. The provision would increase state tax revenues by $5.5 million over two years. That’s less than Evers’ plan, which would have raised taxes on vapor products by 71%, raising $35 million over the biennium.
The budget bill now goes to the full Senate and Assembly, which could vote on the package as early as June 25. It would then go to Evers, who could use his powerful veto pen to cut sections of the bill or nix the entire document.
Assembly Speaker Robin Vos, R-Rochester, who on Tuesday warned Evers not to veto the GOP tax plan, said he does not accept the possibility that the governor will veto the budget in full.