Republicans unveil plan to reduce debt and cut income and business taxes

MADISON - Republican lawmakers plan to pass a package next week that would cut income taxes, reduce a business tax and pay down state debt, but their plan does not include the boost in school funding that Democratic Gov. Tony Evers has sought.

Republicans who control the Legislature said they were united and would send their plan to Evers in less than a week. But an aide to Evers criticized the proposal, raising questions about whether it could get the governor's signature.

"This smart budgeting over the last 10 years is paying big dividends for our Wisconsin taxpayers," GOP Rep. Joan Ballweg of Markesan said Friday at a Capitol news conference. 

Evers spokeswoman Britt Cudaback issued a statement saying lawmakers should put more money toward schools and cut property taxes before they end their session for the year and "take an eight-month vacation."

"Unfortunately, Assembly Republicans made it clear today that they would rather break their promise to the people of our state than work together on funding our schools and reducing property taxes in Wisconsin," Cudaback said in her statement.

State officials got new projections last month that say the state will have an extra $620 million in its main account by July 2021 even after setting aside money for the state's rainy-day fund. 

Under the Republican plan announced Friday, tax filers on average would see their income taxes reduced by $106 this year. Most would see the benefit of that early next year, when 2020 taxes are due.

The income tax cut would cost about $248 million in the next fiscal year and $224 million a year after that, according to the nonpartisan Legislative Fiscal Bureau. 

Income taxes would be reduced by making changes to the standard deduction. More than 2 million tax filers — about two-thirds of the state's tax filers — would receive a tax cut, according to the fiscal bureau.

The tax cut is aimed toward the middle class but would vary by income level. Those making $25,000 to $30,000 a year would see an average cut of $88, while those making $70,000 to $80,000 a year would see an average cut of $146, according to the fiscal bureau.

Individuals who make more than about $120,000 and married couples who make more than about $145,000 would not receive a tax cut. A small number of taxpayers who claim itemized deductions — about 4,700 — would see a tax increase of $11 on average.

In addition, the GOP proposal would reduce the personal property taxes paid by businesses by $45 million a year. Local governments would get payments from the state to cover the business taxes they would no longer take in.

Under another provision, the state would use cash to pay off $100 million in debt. And in the future, some unexpected revenue would also be used to pay down debt.

Now, half of any money in excess of estimates is deposited in the state's rainy-day fund. Once that account amounts to 5% of state spending, half of any excess revenue would be used to pay off debt. 

A hearing on the GOP plan will likely be held Monday. The Senate will pass it Wednesday and the Assembly will pass it Thursday, said Assembly Speaker Robin Vos, R-Rochester. 

Evers last week offered a plan to put $252 million toward schools and property tax relief. Vos said lawmakers didn't need to increase school funding now because they boosted it last year and may do so again next year. 

"We have already made a really good, strong investment in public schools, so it seems to me when you get a surplus rather than just saying where can we spend more money, we wanted to focus on making sure we give it back to the people who have actually earned it," Vos told reporters in Milwaukee. 

Senate Majority Leader Scott Fitzgerald, R-Juneau, cheered the plan to cut income and business taxes. 

"Wisconsin is in great fiscal shape and we should prioritize giving money back to taxpayers," he said in a statement.

A year ago, Republicans approved a plan to cut income taxes by $338 million a year. Evers vetoed it, saying it was irresponsible to pass a tax cut before taking up the state budget.

The budget and related legislation he signed in July lowered the state's two lowest income tax brackets, reducing taxes on average by $136 per person this year. 

Contact Patrick Marley at patrick.marley@jrn.com. Follow him on Twitter at @patrickdmarley.