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Evers vetoes GOP income tax cut, retirement tax break and marriage credit increase • Wisconsin Examiner

Gov. Tony Evers vetoed three of four Republican-backed bills to cut taxes Friday, declaring that they “would set Wisconsin on a path toward insolvency.”

The bills the Democratic governor vetoed included AB-1020, raising the top income in the state’s second-lowest tax bracket to just over $112,000; AB-1021, exempting up to $150,000 in retirement income from the state income tax; and AB-1022, nearly doubling the current maximum marriage tax credit.

A fourth bill, AB-1023, increasing the state’s child care tax credit, was not listed in Evers’ announcement, suggesting the possibility that Evers could sign that legislation. It was the only one of the four proposals in the package Republicans introduced in January to garner significant Democratic support in the Legislature.

There were no additional announcements from the governor’s office Friday.

In his veto messages Evers called the vetoed bills “fiscally irresponsible measures that would leave the State of Wisconsin unable to meet its basic obligations to adequately fund education, health care, public safety and aid to local governments” in the 2025-27 two-year budget cycle and subsequent years.

Combined, the three vetoed wills “would reduce revenues by such a margin that it would likely force the state, even with ordinary revenue growth, to partially or fully drain the Budget Stabilization Fund just to provide bare minimum inflationary adjustments to key programs” in the next budget, Evers wrote.

In his veto message for the income tax bracket change, Evers said the measure would cost more than $1.2 billion in the state’s 2024-25 fiscal year and more than $751 million a year in subsequent years.

If enacted, the bill would have reduced the state income tax on earnings between $28,640 and $112,500 for single filers and between $38,190 and $150,000 for married couples filing jointly from the current 5.3% to 4.4%.  

All taxpayers at or above those incomes would see their taxes reduced. A Legislative Fiscal Bureau Analysis said taxpayers whose income is less than $100,000 would get an average annual tax cut of about $201.

For taxpayers with incomes of $150,000 or more, the change would cut taxes by $900 or more a year on average, according to the fiscal bureau.

Rep. Mark Born (R-Beaver Dam), Assembly co-chair of the Legislature’s Joint Finance Committee, accused Evers of “hypocrisy” with the vetoes in light of statements the governor made identifying the middle class with incomes of $150,000 or less. 

In a statement, Assembly Speaker Robin Vos (R-Rochester) asserted that with his vetoes, Evers “refuses to support tax cuts that directly benefit the middle class, even when using defined parameters on what he deems as middle class.”

The vetoed measure to waive state income taxes for taxpayers 65 or older on the first $75,000 of retirement income for single filers and $150,000 for married joint filers would reduce state revenues by $658 million in 2024-25 and $472 million per year after, Evers wrote in his veto message.  

“This veto is not only a slap in the face to our parents and grandparents, it keeps Wisconsin at a disadvantage when they are looking for where to retire,” said Sen. Rachael Cabral-Guevara, who authored the bill in the Senate.

A statement from her office said that retirees “would have seen an average savings of over $1,500 in tax year 2024 if the bill was signed into law.”

According to the Legislative Fiscal Bureau, however, the average taxpayer savings across all incomes from the measure would be $781 in 2024. For taxpayers with incomes in the $50-$60,000 range, the average savings would be $317, the fiscal bureau calculated, while for those with incomes in the $90-$100,000 range it would be just under $900. The bureau projects an average savings exceeding $1,500 for taxpayers in the $150-$200,000 range.

The vetoed bill that would have raised the marriage tax credit limit to $870 from the current $480 would cost the state $169 million in 2024-25 and almost $161 million per year after.

Senate Minority Leader Dianne Hesselbein (D-Middleton) endorsed Evers’ vetoes.

“I support providing targeted tax relief to those who need breathing room in their household budgets, but the plan proposed by Republicans is fiscally irresponsible, largely benefiting those making over $100,000 and likely putting our state at a multi-billion dollar deficit in just a few years,” Hesselbein said in a statement. 

Evers also wrote that in cutting taxes, the state could be forced “to repay billions of dollars it received under the American Rescue Plan Act of 2021.” Language in the federal pandemic relief legislation forbade states from using those funds to offset tax cuts, although a January 2023 federal ruling upheld a permanent injunction against enforcing that provision.

In his veto messages, Evers contrasted the Republican proposals with a series of tax credits he proposed in the 2023-25 budget that GOP leaders in the Legislature rejected. Those measures included a tax credit amounting to 10% of the income tax paid by single filers with incomes of $100,000 or less and joint filers with incomes of $150,000 or less, phasing out at incomes above those ceilings.

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originally published at https%3A%2F%2Fwisconsinexaminer.com%2F2024%2F03%2F01%2Fevers-vetoes-gop-income-tax-cut-retirement-tax-break-and-marriage-credit-increase%2F by Erik Gunn

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