MADISON — In what one legislative aide described as the “Big Bertha” of tax cuts, the Republican-led Joint Finance Committee on Thursday passed a biennial budget packed with a combined $3.4 billion in tax relief.
The historic tax cuts, announced before the Republican-led Joint Finance Committee passed its 2021-23 state budget proposal, includes approximately $2.3 billion in income tax reductions. Property taxes would decline by $650 million, with the state pumping more money into the equalization aid formula and technical college system. And the plan calls for another $200 million to repeal Wisconsin’s antiquated personal property tax on businesses.
The tax relief comes compliments of a massive projected surplus — $4.4 billion more than previously projected by the end of the next budget. And Wisconsin is receiving billions of dollars more in federal pandemic relief.
“When we got news of the massive new surplus, we promised transformational tax cuts. Today, we’re delivering on that promise with a $3.4 billion tax cut package which reduces the tax burden on middle class families, active-duty military members, property taxpayers, and main street employers,” said Senate Majority Leader Devin LeMahieu (R-Oostburg).
Lawmakers say the tax cut package will bring more than $1,200 in combined tax relief annually for middle-income families in Wisconsin. That includes $900 in income tax relief, and $300 in property tax reductions for the typical homeowner.
“Today, Legislative Republicans approved historic tax relief to middle-class Wisconsin taxpayers,” said JFC co-chairs, state Rep. Mark Born (R-Beaver Dam) and Sen. Howard Marklein (R-Spring Green), in a joint statement. “This year has been incredibly difficult for individuals, families, and businesses, and this money will result in significant income, property, and personal property tax cuts to provide much needed relief.”
The income tax cuts, driven by the elimination of a middle-income tax bracket, would take effect Jan. 1, 2022.
That is, of course, if tax-and-spend Gov. Tony Evers doesn’t veto the budget proposal, as he has previously threatened.
“Democrats would be insane to vote against it. Evers would be insane to veto it,” a Republican legislative aide told Empower Wisconsin.
But here we are. Democrats insist on spending the surplus on a host of liberal initiatives.
“The GOP tax cut is eating our seed corn,” said Sen. LaTonya Johnson (D-Milwaukee), one of four Democrats on the Joint Finance Committee, all voting against the tax cuts. “It’s blowing the biggest opportunity that we have — our once-in-a-lifetime opportunity to invest in our state, in our kids and in their precious futures.”
Evers, who has about $2.5 billion in federal funding to spend at his discretion, has insisted that the Legislature’s Republican majority has been stingy with its budget proposal. He’s particularly unhappy about Republicans’ refusal to grow welfare programs like BadgerCare through the federal Medicaid expansion and what he obtusely describes as “paltry” K-12 state funding.
But the GOP’s proposal would do what Evers and educrats have long demanded. It delivers two-thirds state funding for education. In fact, state aid to schools is estimated to be 68 percent in the second year of the biennium — or to a $2,900 increase per student statewide.
While the funding boost should make educrats a little less surly, some fiscal conservatives have expressed concerns that the largest public school systems in particular will receive another windfall of cash after locking students out of in-person learning.
The tax relief package includes another $40 million over the biennium to exempt all active duty military income, and nearly $10 million marked to help defray child care costs.
“When it was announced that the state budget would have a nearly $6 billion surplus, (Wisconsin Manufactures & Commerce) WMC called for substantial tax relief — and that is exactly what Republican leaders in the legislature did,” said Cory Fish, WMC general counsel and director of Tax, Transportation & Legal Affairs.
“Not only will the average family save roughly $1,200 over the next two years, Wisconsin businesses will be in a better position to attract and retain talent while investing in their future,” Fish added.
WMC had urged the Legislature and Evers to repeal the personal property tax, the 170-year-old assessment on the “personal property” of businesses, from phones to forklifts.
The Republican budget also increases the state’s Rainy Day Fund to more than $2 billion. That up nearly 10,000 percent since the end of Democratic Gov. Jim Doyle’s tenure in late 2010, when the fund had less than $2 million in it.
“Now more than ever our voters have stated that they want the economy to grow, taxes to be cut, and the Legislature to have a say in the decision-making process. We are confident we have put forth a reasonable, responsible and realistic budget that the governor will sign,” Assembly Speaker Robin Vos (R-Rochester) said.