MADISON (WKOW) -- Wisconsin families could see hundreds of dollars more in savings under a new Republican income tax proposal, but Democrats say it comes at a cost that's too high for the state.
Earlier this year, Governor Scott Walker (R-Wisconsin) proposed a $343 million income tax cut as part of the 2013-15 biennial budget.
But a Republican lawmaker says the state can afford to cut far more, because of a surplus that is now close to $750 million. Rep Dale Kooyenga (R-Brookfield) arrives at that number by adding $183 million that was supposed to go to the UW system to the state's estimated surplus of $575 million. Rep. Kooyenga says the bulk of that money should be handed back to the taxpayers.
"We are collapsing the middle class bracket which goes from $14,500 all the way up to approximately $350,000 into one tax bracket that will be at 5.9 percent," said Rep. Kooyenga, who's plan actually lowers the rate to 5.9 percent for families earning between $14,500 and $319,460.
Currently that group of income earners pays between 6.15 percent on the low end and 6.75 percent on the high end. Combining those groups means reducing the number of tax brackets from five to three. His plan also reduces the rate on anyone earning over $319,460 from 7.75 to 7.6 percent. People earning under $14,500 would see their rate reduced from 4.6 to 4.5 percent.
Rep. Kooyenga says his plan cuts an additional $409 million in taxes on top of Gov. Walker's plan and puts Wisconsin on a path towards being more competitive.
"Everyone in Illinois pays five percent. Illinois millionaires are paying a five percent rate and Wisconsin's middle income class, even after these reforms, is at 5.94 percent," said Rep. Kooyenga.
But Democrats say more than half of the tax cut will go to families earning more than $100,000 dollars a year and that some of that money should be going back into public schools.
"In fact, the plan is built on the cuts that were taken out from our schools in the last budget," said Rep. Jon Richards (D-Milwaukee).
Senate Republicans in swing districts may again be the group that decides how much of the proposed cut goes forward. But several more conservative senators are already on board.
"People say they want simpler income taxes and lower income taxes and this should be their dream," said Sen. Glenn Grothman (R-West Bend).
GOP lawmakers say those tax cuts will lead to more economic growth, but Democrats say Republicans have promised that before and haven't delivered.
"I think its important to look at what we know about jobs. And everyone from the Bureau of Labor Statistics to Gov. Walker's own Department of Workforce Development says that we're lagging in job growth," said Rep. Richards.
A memo from the Legislative Fiscal Bureau shows the plan would reduce tax revenues by $914 million from 2015 to 2017, but Republicans say that assumes there won't be any economic growth.
That's something the GOP is clearly counting on, but Democrats say its a bad gamble.
MADISON (WKOW) - Rep. Dale Kooyenga is proposing a $751 million income tax plan that more than doubles Governor Scott Walker's tax cut proposal.
Kooyenga(R-Brookfield) held a news conference Tuesday morning to talk about his plan, which he called a "strong step" toward improving Wisconsin's tax system. He also says it will simplify the state tax code.
Kooyenga claims the Republican-controlled Joint Finance Committee will take up his plan as it works to finalize changes to Gov. Scott Walker's budget and likes the chances of it being included.
His plan also calls for eliminating the alternative minimum tax and the estate tax as well as 18 refundable and non-refundable business tax credits. Those include tax credits benefiting the film industry, dairy manufacturers, meat processors and beginning farmers.
In addition, plan would eventually lower the number of state income tax brackets from five to three by 2015. The lowest bracket, for households that make up to $14,510 a year, would be taxed at 4.5% instead of the current 4.6% . The tax rate for the top bracket would drop from 7.75% to 7.6%. And the three middle brackets would collapse into one by 2015, meaning the new tax rate of 5.94% would apply to all Wisconsin households making between $14,510 and $319,460.
Revenue estimates for the state have increased by $500 million since February when Gov. Walker released his budget proposal.
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