Evers vetoes most of the tax cuts. But that doesn't mean tax-cutting is over for 2023-25

This afternoon, we got the info we'd been waiting for since the Legislature sent the state budget up the chain last week.

Impact of @GovEvers vetoes leaves $175 million in income tax breaks; Republicans proposed $3.5 billion.

Money that would've gone to the tax breaks instead remains in the general fund.

Which means the guv and lawmakers will likely have a surplus to bicker over again in 2 years. https://t.co/f7o1NllMCa

— JR Ross (@jrrosswrites) July 5, 2023

I figured that the cut to the top tax rate would be vetoed, but I didn't know what Evers would do (or not do) about the second tax bracket, which would have cut the rate from 5.31% down to 4.4%, and would have had a big price tag, given that a majority of Wisconsin tax filers have a lot of their tax dollars fall into this bracket of taxabe income.

That being said, let's remember that ALL Wisconsin taxpayers will benefit from the tax cut in the bottom two rates, with the 3.54% rate dropping to 3.5% and the 4.65% bracket dropping to 4.4%. And that the taxpayers currently in the 5.31% bracket (along with the richest ones in the 7.65% bracket) got all of the benefits from the income tax cut that Evers signed in the 2021-23 state budget.

Evers also vetoed a WisGOP plan to update withholding tables next January 1, which would have been a one-time drop in revenues of $603 million if all the tax cuts had become law. But that's likely to be turf-claiming, where Evers wants his Administration to be the ones to decide when the tables get changed and more money goes into take-home pay vs refunds. He did the same veto in 2021, and then ordered the Wisconsin Department of Revenue to change the tables that following January.

And let's go back to JR Ross's original post, because deleting more than $3 billion in tax-related moves means that money will be added to the state's bottom line as the budget gets published. Which now means there should be $3.6 billion or more that can be played with between now and the 2024 elections, and Evers hinted that the budget adjustments shouldn't end with today's signing of the bill.

Using my broad, constitutional veto authority, I've ensured ample state resources are readily available for the Legislature to complete their work on this budget—to do the right thing and to focus on passing real solutions for the urgent challenges facing our state.

— Governor Tony Evers (@GovEvers) July 5, 2023

There's nothing stopping Evers from resurrecting his call to expand the Homestead and Earned Income Tax Credits, which would give relief to lower-income Wisconsinites. And perhaps think about adjusting a number of write-offs to catch up to inflation over the last several years (I've got a list, Governor).

Evers could also apply more heat on WisGOPs to restore $340 million in COVID-era assistance for child care providers that WisGOPs refused to fund, and keep the issue fresh in people's minds before the 2024 elections. And perhaps he could be willing to trade a smaller income tax cut for the 5.31% bracket or even cut the top rate to 7.5% as an olive branch. But there are plenty of options after Evers' vetoes today, and with 3 years left in his term and solid approval ratings, now is the time to press the advantage.

Of course, Evers' biggest and most creative veto was on the spending side, and I'll talk about that one in the next post.