Wisconsin workers likely to get a tax break, but at what cost? - WQOW TV: Eau Claire, WI NEWS18 News, Weather, and Sports

Wisconsin workers likely to get a tax break, but at what cost?


MADISON (WKOW) -- Republican leaders are making it very clear tax relief is going to be a top priority in this legislative session.

"We are optimistic about having an across-the-board income tax cut for every single person in Wisconsin that pays income taxes," said Rep. Robin Vos (R-Rochester), the new Assembly Speaker.

"Very interested in an income tax cut, there's no doubt about it," agrees Sen. Scott Fitzgerald (R-Juneau), the Senate Majority Leader.

There is also no doubt Wisconsin workers pay more in state income taxes than their counterparts elsewhere.

While the rate at the very bottom and top of the scale is comparable to other states, the 6.5 percent rate for middle-income workers is quite a bit higher.

"And that's of course where the bulk of people are and that's probably why there's been more talk about folks in the middle, upper middle getting some rate relief," said Todd Berry, President of the Wisconsin Taxpayers Alliance.

A projected surplus of $1.5 billion from the Wisconsin Department of Revenue is one reason for optimism, but Berry says that number may be inflated.

"There aren't any signs that the national economy is setting the world on fire, so I don't expect, at least in the next year some kind of big windfall of tax revenue," said Berry.

Even a quarter or half-percent rate cut would cost hundreds of millions of dollars in revenue.  Democrats worry about where that money will come from.

"We saw the largest cut to K-12 education in Wisconsin history and until those funds are fully restored, we shouldn't be talking about divvying up the leftover change from that," said Sen. Chris Larson (D-Milwaukee), the Senate Minority Leader.

Assembly Minority Leader Peter Barca (D-Kenosha) says if tax reform is a priority, he hopes Republicans will start with restoring cuts they made last session to the earned income credit, which benefits low-income workers with children.
"People that work for modest wages of $9, $10 an hour, their tax burden was increased," said Rep. Barca.

Todd Berry says reducing rates as part of a comprehensive tax reform that would throw out all of the credits and deductions would be the most responsible idea.  But he questions whether the legislature has the political will to do it.

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