‘It’s Your Money’: Wisconsin Governor Pushes $800 Million Tax Cut
He’s the architect of the Badger State’s budget recovery, and in January Gov. Scott Walker (R) laid out his “Blueprint for Prosperity.”
Buoyed by a state revenue boom—with projections of at least $900 million more than expected by 2015—the governor during his annual State of the State address unveiled his plan for a massive tax cut.
“Tonight, we are laying out a plan to move Wisconsin further down the road to prosperity,” Walker said. “Our friends and neighbors are going back to work, and job creators are expanding their businesses. Thanks to sound fiscal management, I am proud to announce further tax relief for Wisconsinites and additional funding for worker training.”
‘Give It Back to the People’
The centerpiece of the “Prosperity” plan is a combined tax cut package of more than $800 million, putting the bulk of the surplus revenue “back in the hands of the hard-working taxpayers,” as Walker put it.
The plan calls for some $406 million in property tax reduction, nearly $100 million in income tax cuts, and trimming Wisconsin’s withholding for state income taxes by $322.6 million.
“What do you do with a surplus?” Walker asked. “Give it back to the people who earned it. It’s your money.”
According to the governor’s estimates, the typical homeowner will see about $100 shaved off her next property tax bill. The income tax cut would drive down the lowest income tax bracket from 4.4 percent to 4 percent. A family making $40,000 a year would get a tax savings of about $58, according to the Walker administration.
Reducing Wisconsin’s withholding tax is expected to save a typical family of four about $58 a month, money no longer pulled from their paychecks. That’s more than $520 a year staying in the pockets of taxpaying families.
The withholding plan is getting two enthusiastic thumbs up from one of the Legislature’s more active accountants.
Deficit Also to Shrink
“I applaud [Walker’s] approach in regard to income tax withholding tables,” said state Rep. Dale Kooyenga, (R-Brookfield), a member of the legislature’s “CPA caucus,” a cadre of conservative accountants who keep a keen eye on the state’s finances.
“Every year Wisconsinites provide the state with an interest-free loan; the state collects 120 percent of your taxes due,” Kooyenga added in his statement.
The adjustment, Kooyenga notes, has the accompanying benefit of lowering Wisconsin’s accumulated Generally Accepted Accounting Principles deficit by $323 million, further moving the state away from smoke-and-mirrors budgeting that just a few years ago pushed the GAAP deficit well above $2 billion.
Walker’s prosperity plan would also pump another $100 million into Wisconsin’s reserve, or “rainy day” fund.
Last October the administration announced another $153.2 million would go into the reserve account, bringing the total at the time to $278.5 million, a vast improvement from the shallow balances just a few short years ago.
Spending Cuts Lambasted
Much has changed in Wisconsin since Walker made his first State of the State address in early 2011, when the new governor and the legislature faced a $3.6 billion budget deficit. Walker’s budget cut deep to right the state’s fiscal ship, something Democrats will not let the first-term governor forget as he lays out his blueprint for reelection.
Assembly Minority Leader Peter Barca (D-Kenosha), in his response to Walker’s speech, criticized Republicans for the surplus, reiterating the Democratic Party talking point that the GOP balanced the budget at the expense of Wisconsin’s education system.
“The surplus came, partially, from historic cuts to public schools and job training at technical colleges,” Barca said. He added, “The surplus was taken from local communities that provide public safety and other basic services.”
Barca called Walker’s tax cut proposal an election-year gimmick that will expand the state’s structural deficit by $800 million.
Republicans Predict Economic Growth
Republican leaders stand by Walker’s plan to give the extra revenue back to the people who paid it in. The tax cuts, they say, will put more money into consumers’ hands, sparking more spending, more economic demand, more production, more jobs, and, ultimately, more revenue for the state’s coffers.
“Now we have another opportunity to cut taxes on the hardworking people of Wisconsin, and that’s just what we will do,” state Sen. Alberta Darling (R-River Hills) said in a statement. “It’s time to send as much of that extra revenue as possible back to the taxpayers. It’s their money.”