MADISON, Wis. (AP) – The Republican-controlled Wisconsin Senate was expected to send a middle class tax cut bill to Democratic Gov. Tony Evers on Wednesday, setting up what is likely to be the new governor’s first veto.
The measure would be the first bill passed by the Legislature this session. Republicans moved quickly to pass the $340 million-a-year tax cut to get ahead of Evers, who campaigned on a promise to cut middle class taxes by 10 percent and planned to include it in the state budget he introduces in two weeks.
While Republicans and Evers both want to cut income taxes for middle income earners, they can’t agree on how to pay for it. Both sides have said they would be willing to compromise, but neither has shown signs of budging in an early test of how they will govern.
Republicans would tap budget reserves, a move Evers opposes because it takes that money off the table for other spending priorities and is not sustainable in future years. Instead, Evers wants to all but eliminate a tax credit program that effectively removes the state income tax for manufacturers. That would pay for about half of his $415 million tax cut. He hasn’t identified how he would fund the remainder.
Republicans oppose Evers’ plan, calling it a $220 million tax shift onto manufacturers that would stifle economic growth. Democrats cast the tax credit as a giveaway to millionaires and say there’s no evidence that it’s been as beneficial to the economy as Republicans argue.
The Assembly passed the GOP income tax cut plan with no Democratic support on Tuesday, sending it to the Senate which plans to take it up Wednesday. Evers hasn’t said he will veto the measure, but he’s repeatedly voiced opposition to the GOP funding source while voicing hopes for a compromise.
Republicans don’t have large enough majorities in the Senate and Assembly to override an Evers veto without Democratic support. If Evers were to veto the bill, lawmakers could still reach a compromise with him and include a tax cut in the budget that likely won’t be voted on until late spring or summer.
Under the Republican bill, the maximum deduction would increase by 20.6 percent for single people making less than $127,000 and joint filers making less than $155,000. The average cut for all filers would be $170, according to the nonpartisan Legislative Fiscal Bureau.
The Evers plan would create a 10 percent refundable tax credit for single filers earning below $80,000 a year and married-joint filers making less than $125,000. It would also expand the earned income tax credit for lower income filers. The average tax cut under his plan would be $225, Evers’ office said.