Flat tax proposal overshadows zero tax idea

Empower Wisconsin | Jan. 20, 2023

By M.D. Kittle

MADISON — Tax reform is top of mind for Republicans this legislative session. But while a flat tax measure has taken center stage, a go-bolder proposal by one legislative leader to eliminate Wisconsin’s personal income tax has seemingly disappeared from the tax cut discourse.

A new State Policy Network (SPN) survey shows there is a good deal of support for nixing the state income tax.

The survey, conducted in partnership with Morning Consult, finds a plurality of Wisconsin voters (45%) — across party lines — back eliminating the tax. Another 40 percent are opposed, while 16 percent don’t know or don’t have an opinion. Nearly six in 10 agree Wisconsin’s taxes are too high.

CJ Szafir, president of the Institute for Reforming Government, said a looming recession and out-of-control inflation demand transformational tax reform. And with a $6.6 billion state surplus, the time is right, he said, for Wisconsin to join the nine states without an income tax.

“Wisconsinites realize going to zero percent makes us more competitive with states like Florida and Texas, and No. 1 in the Midwest,” Szafir said. “That’s really a good deal for economic growth and attracting families and businesses.”

Amid increased economic concerns in the “Biden economy,”  Szafir said voters, especially Republicans, are demanding a “major shake-up of the status quo.”

That shake-up, at least for GOP leaders in the Legislature, appears to be aimed at a flat tax.

Senate Majority Leader Devin LeMahieu (R-Oostburg) and Rep. Rob Brooks (R-Saukville) recently rolled out a tax reform proposal that would ultimately phase in a 3.25 percent flat income tax rate by tax year 2026.

“This proposal will fundamentally transform Wisconsin’s individual income tax and keep more money in the pockets of hardworking Wisconsinites,” LeMahieu said in a statement.

Disappearing from the tax cut conversation in recent weeks is Senate President Chris Kapenga’s call for eliminating the state income tax. 

“I think that, if we’re going to do this (tax cuts) and we’re going to do something bold and we’re really going to attract workers to the state and bring more families to the state, (we should) go to no income tax like Florida,” the Delafield Republican told Empower Wisconsin late last month.

As Republicans in both houses appear to gather behind the flat tax proposal, Kapenga — nor anyone else for that matter — has not mentioned getting rid of the income tax again.

The point may be moot, anyway.

Democrat Gov. Tony Evers has effectively said a flat tax bill is dead on arrival. It’s safe to assume the progressive isn’t interested in flattening or doing away with altogether Wisconsin’s progressive income tax. Only nine states have an individual income tax rate higher than Wisconsin’s top rate of 7.65 percent.

Evers has talked about a 10 percent tax cut that he says would target the middle class. If his previous budgets are any guide, the governor’s tax plan would sock it to higher earners while delivering payouts for those who pay little or no taxes.

Yet, the Institute for Reforming Government believes there’s room to think even bigger. IRG’s position is that eliminating the state income tax would make Wisconsin a national leader.

Szafir certainly doesn’t believe getting to zero is out of the question.

“It’s like Act 10. No one thought it was possible until it was,” he said, referring to the monumental government reforms driven by former Gov. Scott Walker and legislative Republicans a dozen years ago.

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