Gov. Tony Evers vetoes major parts of Republican $2.1 billion income tax cut package

MADISON – Gov. Tony Evers on Friday rejected three bills from a $2.1 billion Republican tax package, saying they would "set Wisconsin on a path toward insolvency" if enacted.

The three bills if signed into law would have significantly expanded the state's second-lowest tax bracket to include more than 1 million Wisconsin residents earning between $19,000 and $150,000 per year, exempted up to $75,000 of retirees' income, and expanded tax credits for married filers.

Evers has not yet acted on the fourth bill in the package, which would expand tax credits for filers with children.

In an interview earlier this month on WISN-TV's "Upfront," Evers said the credit expansion for filers with children "seems like something that would work," although he said it wouldn't address the workforce issues child care providers face.

“When we deliver tax relief for the people of Wisconsin — just as we have — it should be real relief aimed at helping Wisconsin’s working families afford rising costs, and it should be responsible and sustainable, ensuring we can keep taxes low now and into the future without causing devastating cuts to priorities like public schools and public safety down the road," Evers said in a statement. "Republican members of the Wisconsin State Legislature today once again fail to balance these important obligations."

No Democratic lawmakers voted with Republicans in support of the bracket expansion or the increased credit for married filers. A few voted for the retiree exemption, and a large number backed the child tax credit expansion.

The proposals' Republican authors said the bills were designed to make Wisconsin a more attractive place to live for families, low- and middle-income earners and retirees. Democrats questioned whether the bills were the best way to accomplish those goals.

“Despite repeated opportunities provided by legislative Republicans, Gov. Evers refuses to support tax cuts that directly benefit the middle class, even when using defined parameters on what he deems as middle class," Assembly Speaker Robin Vos, R-Rochester, said in a statement.

“Even more concerning is the governor's disregard for Wisconsin's seniors, who stood to gain significant relief from the proposed tax cut. By ignoring their needs and prioritizing political posturing over practical solutions, Gov. Evers is failing to fulfill his promise to return the surplus to Wisconsin's families and seniors."

Sen. Rachael Cabral-Guevara, R-Appleton, said vetoing the retirement exemption is "a slap in the face" to parents and grandparents. The governor is "hellbent on keeping YOUR money sitting in Madison to fund liberal pet projects and buy votes headed into an election year," Sen. Duey Strobel, R-Saukville, said on X.

Altogether, the measures would have cost $2.1 billion in the 2024-25 fiscal year and $1.4 billion every year afterward, according to a nonpartisan analysis from the Legislative Fiscal Bureau. The measures would have reduced the state's total income tax revenue by $2 billion per year in fiscal 2024-25 and $1.4 billion per year after that, according to the Legislative Fiscal Bureau.

Wisconsin is projected to end the 2023-25 budget with a $4 billion surplus and $2 billion in its rainy day fund.

Evers said the package, if enacted in its entirety, would likely force the state to partially or fully drain its rainy day fund in order to provide minimum inflationary adjustments to key programs in the 2025-27 budget. He also warned that additional tax reductions could result in the federal government recouping funds distributed under the American Rescue Plan Act (ARPA), "completely reversing even under the best projected economic circumstances the progress we have made toward improving our state's fiscal condition."

Evers in 2021 signed a $2 billion tax cut in the state budget, but he and Republican lawmakers have largely failed to find consensus on how to cut income taxes in the state since.

Twice last year, Evers vetoed a GOP proposal to cut the income tax rate for the state's third tax bracket, which applies to joint filers earning up to $405,000 per year. Evers said at the time he would not sign into law a tax cut for wealthy earners. Republicans have said the new proposals were crafted with Evers' previous veto messages in consideration.

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Jessie Opoien can be reached at [email protected].

This article originally appeared on Milwaukee Journal Sentinel: Tony Evers vetoes major parts of Republican income tax cut package