The GOP-controlled Joint Finance Committee voted Thursday to approve a roughly $321 million middle-class tax cut. It was the third attempt to find an income tax cut that both the GOP and Democratic Gov. Tony Evers can agree on. But Democrats on the committee were skeptical.
The budget committee voted 12-4, along party lines, to include the tax cut in the budget. The plan lowers income taxes for the second-lowest bracket, resulting in a $321 million tax cut over the next two years. Another nearly $60 million would go toward property tax relief.
The state would pay for the cuts through expected increases in tax revenue and by levying a new tax on online sales. Companies like Amazon would collect sales taxes from third party sellers, resulting in an expected $200 million in revenue. The new tax collection would cover additional cuts to individuals making about $150,000 or less.
State Rep. Terry Katsma, R-Oostburg, said Republicans have consistently given tax cuts to taxpayers. “These tax cuts have kept property taxes below where they were in 2010," said Katsma. "They’ve focused relief on low to moderate income earners. The median family of four will have saved $1,600 from 2013 to 2019, because of our tax cuts alone. We did this all without raising taxes on manufacturers or farmers.”
Evers’ state budget proposal calls for raising taxes on manufacturers to ultimately cover cutting income taxes by about $830 million over two years. Republicans had previously rejected Evers’ proposal because they created and support the manufacturing tax cut program.
But Democrats on the budget committee, including Chris Taylor of Madison, pointed out that Evers’ proposal would result in double the income tax breaks to the average person. "It gives about over $400 to the average person over the biennium," she said. "You [Republicans] get to about $150 over the biennium. But, the difference is, he [Evers] doesn’t give it to the people who don’t need it. You do."
Evers also commented along those lines on Twitter Thursday.
The People’s Budget puts more money back in the pockets of hardworking families. The Republican budget protects giveaways for millionaires. I think the people deserve better. https://t.co/zLFalwqJeQ
— Governor Tony Evers (@GovEvers) June 13, 2019
Taylor said Republicans included a tax break for people who make more than $150,000 a year, while Evers didn’t. She said 80% of the benefit from the manufacturing tax cut goes to people that make $1 million a year or more.
State Rep. Evan Goyke, D- Milwaukee, also pointed out the Republican income tax cut was smaller than the governor’s and applies to fewer people. “The question then immediately turns to: well, how could that be the case?" he asked. "And we’re going to talk in our final wrap-up motions about decisions that the majority party has made that have limited the use of federal funds and prioritized the use of state taxpayer funds."
One of those main sources of federal funds is Medicaid expansion. Republicans on the committee voted against that in a previous committee meeting.
Finance Committee co-chair Republican Rep. John Nygren said Republicans might be asked why they are not supporting Evers’ income tax proposal. He said Evers already had the chance to get an income tax cut earlier this year.
“We actually passed, both houses, the tax cut that Governor Evers campaigned on," he said. "He vetoed it. That tax cut would have cut taxes by $340 million per year. It would have provided over $300 million a year in relief to median income households."
Evers said he vetoed the bill because it addressed a major fiscal policy item outside of the state budget process.
With this latest vote approving the $321 million income tax cut, the finance committee wrapped up revisions on Evers’ state budget. The budget is expected to go to the full Legislature by the end of the month, and then to Evers — who may or may not veto the proposal.