Democratic Gov. Tony Evers, in his first major legislative act as Wisconsin’s chief executive, vetoed a Republican bill that would have tapped state surplus funds to cut taxes for the middle class, calling it fiscally unsound and lacking bipartisan support.
Republican lawmakers, in turn, called Evers divisive for insisting on something to which they say they’ll never agree: capping a state tax credit for large manufacturers. Evers wants to cap the credit at $300,000 to offset part of revenue lost through his tax cut.
Evers issued a statement late Wednesday announcing his veto, which he had signaled was coming. A veto message from Evers said the GOP bill “would be unsupported going forward as it relies simply on draining” state reserve funds.
The message said Evers objects to the bill being enacted apart from the process by which lawmakers typically make big tax-and-spending decisions: the state budget. Evers plans to announce his state budget proposal next week, and he has said it will include his plan for a middle-class tax cut.
Evers also wrote that he is “troubled and disappointed” that the GOP bill was introduced and passed “without bipartisan support and cooperation.” It passed the Legislature last week on party-line votes.
“The people of the state of Wisconsin expect and deserve for their leaders to work together, and I plan to do my part to ensure that happens,” Evers wrote.
Senate Majority Leader Scott Fitzgerald, R-Juneau, responded to Evers’ veto with a statement saying “middle-class Wisconsinites deserve a tax break — it’s unfortunate that Gov. Evers is telling them to wait their turn instead of lowering their taxes.”
Fitzgerald also maintained he “will not support raising taxes on our state’s job creators.” Farmers, who also can claim the tax credit, would not be affected by Evers’ proposal.
Assembly Speaker Robin Vos said in a statement that Evers “is starting to show his true colors.”
“Only a Madison liberal would believe the only way to cut taxes is to raise taxes on others,” said Vos, R-Rochester.
The GOP bill would have increased the standard deduction on the state individual income tax effective in 2020, providing an average income tax cut of $170 to about 2 million largely middle-class tax filers.
GOP proponents called it an effort to return excess state revenues back to the pockets of taxpayers without shifting the tax burden onto manufacturers — a move they say risks dampening the economic growth Wisconsin has seen in recent years.
“Why would we mess with success? Wisconsin is headed in the right direction and Gov. Evers seems determined to reverse that,” said Rep. John Nygren, R-Marinette, co-chairman of the Legislature’s budget-writing committee, in a statement.
The GOP plan would have reduced state tax revenues by about $490 million in the second and final year of the next state budget cycle.
Evers’ middle-class tax cut plan would provide the average taxpayer a cut of $225. It would reduce state revenue by about $892 million over the next budget cycle. Democrats have only said how they would pay for about half of it, through capping the manufacturing credit.