Wisconsin Assembly Passes $3 Billion Tax Cut; Governor’s Veto Expected

The governor has stated that if Republicans would consider supporting some of his initiatives, he would reconsider cutting taxes.

A general view of the Wisconsin State Capitol in Madison on March 6, 2011. Justin Sullivan/Getty Images

Despite Democrat Gov. Tony Evers’s pledges to veto the plan, the Republican-controlled Wisconsin Assembly passed a roughly $3 billion income tax cut package (pdf) on Sept. 12.

The Assembly passed the measure along party lines with a 64–35 vote, pushing forward legislation that Republicans hope will reduce inflation and encourage retirees from Wisconsin to remain in their home state.

Republican co-author state Rep. David Steffen claimed that the bill’s tax relief would be immediate and widespread.

For single filers making between $27,630 and $304,170 and joint filers making between $18,420 and $405,550, the effective tax rate would decrease to 4.4 percent from 5.3 percent.

The first $150,000 of a married couple’s retirement income would be exempt from taxation under the proposed legislation. The proposed plan would be funded by a $4 billion surplus in the state’s budget.

Democrats agreed with Mr. Evers that the tax cut was unsustainable and that attention should be redirected to other issues, such as lowering the cost of child care and providing more targeted tax cuts to the middle class.

The governor has said that if Republicans would consider supporting some of his initiatives, he would reconsider cutting taxes. However, given the current state of the legislation, Mr. Evers called for a special session of the Legislature for the coming week to allocate more than $1 billion for child care, the University of Wisconsin System, and programs to address a shortage of qualified workers.

The budget director for Mr. Evers has warned that reducing taxes by more than $432 million over the next two years could jeopardize the state’s receipt of approximately $2.5 billion in federal pandemic relief funds. However, Republican state Rep. Mark Born dismissed this concern as a nonexistent threat from the Evers administration.

Other Republican Efforts

Republican state Rep. Terry Katsma said before the Sept. 12 vote that it was disappointing that Mr. Evers had vowed a veto before the measure even had a public hearing.

There aren’t currently enough Republican votes in the Assembly to override a veto. Mr. Katsma said Republicans would consider alternative options if the measure were vetoed.

On Sept. 14, the Assembly will vote on more modest child care proposals introduced by Republicans as the bill to cut taxes now moves to the state Senate.

In addition to dealing with potential tax cuts, the Assembly planned to vote on a constitutional amendment that would make tax increases more difficult on the same day.

Mr. Evers would be unable to stop the constitutional amendment, which will require voter approval before it can be put into place. Under the proposed amendment, tax increases would require a two-thirds supermajority vote in the Legislature, as is the case in 16 other states.

The Assembly was anticipated to approve a second constitutional amendment that would diminish the governor’s authority by requiring legislative approval for the expenditure of federal funds. However, this legislation would allow the governor to spend the money without requiring legislative approval.

Mr. Evers was responsible for the distribution of billions of dollars in federal COVID-19 relief funds during his first term. However, after a nonpartisan audit in December 2022 concluded that Mr. Evers wasn’t transparent enough in deciding where to direct $3.7 billion in aid, Republican legislators renewed their criticism of his spending decisions.

Before taking effect, proposed constitutional amendments must pass two consecutive legislative sessions and be approved by voters.

The Associated Press contributed to this report.