The proposal, which is retroactive to January 1, 2023, has drawn criticism from Democrats who argue that it disproportionately benefits the wealthy.
Wisconsin Republicans in control of the state Legislature’s budget-writing committee have approved a plan that would result in a $3.5 billion income tax cut across the board
According to Republicans, the average reduction for all taxpayers would be 15% or $573. The plan would also reduce the number of tax brackets from four to three, with the lowest rate dropping to 3.5% and the highest rate set at 6.5%. However, Democratic Governor Tony Evers, who had proposed a tax cut focused on low and middle-income earners, expressed dissatisfaction with the GOP’s plan.
Governor Evers believes that tax relief should be targeted towards the middle class, as stated by his spokesperson Britt Cudaback on Twitter. Evers criticized the Republican proposal, accusing them of prioritizing tax breaks for the wealthy rather than providing relief for working families.
Under the Republican plan, the largest percentage drop in tax rates would be experienced by married couples earning over $405,550 or single individuals with incomes exceeding $304,170
Their rate would decrease from 7.65% to 6.5%. The middle two brackets would merge, resulting in a 4.4% rate for all married couples earning between $9,210 and $202,780. The lowest rate for the poorest taxpayers would see a marginal drop from 3.54% to 3.5%.
To finance the income tax cut, the state would tap into its projected $7 billion surplus. Additionally, Republicans have allocated $622 million to prevent property tax increases. Despite Democratic attempts to amend the plan and maintain the highest tax rate at 7.65%, Republicans swiftly rejected the proposal.
While some Republicans, including Senate Majority Leader Devin LeMahieu, sought deeper cuts, their proposition to establish a flat income tax rate of 3.25% by 2026 did not gain support from fellow Republicans due to its estimated cost of nearly $5 billion over two years.
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