WisDems can beat WisGOPs on the tax issue in 2025, if they play it right

As 2025 approaches, it's time for another budget cycle in Wisconsin. And with an estimated $4 billion in the bank, there will be a lot of options on the table for what to do with those funds.

Assembly Speaker Robin Vos says his plan is to (what else?) use those extra funds to put in more tax cuts.

Vos said he’d also like to revisit a proposal introduced last session, which was ultimately vetoed by Evers, that would exempt up to $75,000 in retirement income from state taxes.

“All tax cuts are good,” Vos said. “I can’t think of any that I couldn’t support, but the one that I think is the most important is the retirement tax cut. The people who are most impacted by inflation, food costs, electricity, are people on fixed incomes and those are our seniors and I don’t want people feeling that they have to retire somewhere else to be able to afford their lifestyle.”

Always be scheming....

"All tax cuts are good"? REALLY ROBBIN'? Giveaways to the rich and corporate which incentivize more speculation and profit-hoarding over investing in companies and workers are a good thing? Cutting available resources for public goods and investments are a good thing? Not in any planet I live on.

Also, let me remind you that Wisconsin already exempts retirement income if it comes in forms such as taxable Social Security benefits or federal and military retirement (check here for a list of write-offs), and older Wisconsinites also get an extra personal exemption of $250 that Sconnies under 65 do not. So Vos is talking about giving a tax break older Wisconsinites with investments and added income above the benefits most senior citizens have. I'm not saying that there shouldn't be some kind of discussion of how to help seniors keep up with bills and/or property taxes, but I don't see where Vos's scheme would help those who are most in need. Just richer retirees who might think of becoming tax exiles in some place like Flori-duhhh.

Speaking of schemes, Robbin' has a plan for passing tax cuts sooner than later, to try to set a parameter for budget discussions later in the year.

While tax cut proposals have generally been drafted in the midst of the budget process in the past few legislative sessions, Vos said the approach will be “a little different” in 2025, with lawmakers expected to first pass some form of tax cut in January or February, followed by the 2025-27 biennial budget process, which concludes in the summer.

Doing so would dictate how much funding remains for other budgetary needs like roads, education and other services, Vos, R-Rochester, said.

So Vos is explicitly saying that he wants to try to cut the amount of available funds for those needs before figuring out how much to put in for those publicly-supported needs. And not tying the tax cuts to funding anything else, which makes it easier to veto if the tax cuts are ridiculous.

Not to be outdone GOP Senate Leader Devin LeMahieu also has talked about his group's tax plans.

LeMahieu, R-Oostburg, noted Assembly Speaker Robin Vos, R-Rochester, has raised the prospect of again trying to cut taxes on retirement income. But LeMahieu said he wants broader tax relief that cuts across ages. The majority leader also said he likely won’t bring up his proposal from this session to move the state to a flat tax and believes there’s no appetite in his caucus to try pumping additional state money into various local aids in an attempt to drive down property taxes.

Dem Gov. Tony Evers in the last budget signed a GOP proposal to reduce the bottom two tax brackets to 4.4% and 3.5%. But he vetoed a proposal to reduce the second-highest bracket to 4.4% and to reduce the highest bracket to 6.5% from the current 7.65%.

That second-highest bracket of 5.3% now covers income between $38,190 and $420,420 for married joint filers.

“If you’re working full-time, I don’t know where you find a job that puts you below that, that second-highest tax bracket, frankly,” LeMahieu said.

Let's take a step back on that "income" discussion, because that's a reference to taxable income, not total income. And if you look at how to fill out Wisconsin's tax form, you'll find there is a quite a difference in the two, as the state's standard deduction removes a sizable amount of income that gets taxed in our state.

So that $38,190 of taxable income for married joint filers translates into an actual income of $57,000, and the median household income in Wisconsin was $74,631 in 2023. I'm guessing quite a few Wisconsin married couples are making below $57,000 (or $58,500, if you adjust for inflation in this year), and so they wouldn't be affected by any change in the 5.3% tax bracket. Also, are LeMahieu or other Republicans asking to raise Wisconsin's rock-bottom minimum wage of $7.25 an hour or $2.33 for tipped wages to guarantee that happens? Of course not.

But there is a legitimate point in not having such a wide range of incomes be in that 5.3% tax bracket. So maybe drop that tax bracket of 5.3% to 4.4% for incomes between $70,000 for singles and $140,000 for married couples. It also doesn't spend out the $4 billion surplus within 2 years by not having this permanent tax break be as large for the upper incomes (and make no mistake, richer people get this tax cut as well, they just don't get additional dollars in tax cuts beyond their incomes of $70K/$140K under this example).

This type of limited, targeted tax relief could be something Dems could sign onto in the Legislature, if you buy what the top Dem in the Assembly says in that article discussing Vos's tax cut plans.

“We are not interested in a tax cut that primarily benefits the richest Wisconsinites or corporations, which is a lot of what we’ve seen from (Republicans) in the past several years,” Assembly Minority Leader Greta Neubauer, D-Racine, said earlier this month. “But we are open to a tax cut that puts money back in the pockets of people who are struggling to make ends meet.”

And LeMahieu's comment about not wanting to use state funding to cut property taxes gives Dems an opportunity to get ahead of the GOPs on the taxes that seem to be annoying Wisconsinites the most. As I've said before, this would be an excellent time for Gov Evers and other Dems to try to get K-12 school funding off of the property tax, and have state funding go into the classrooms to make up the difference.

It would also be a good time for Evers to ask again for an expansion of the state's Homestead Credit, which has not been adjusted for inflation by Republicans for over a decade and is projected to have less than 1/3 returned to Wisconsinites as there was a decade ago. Thatr GOP failure has made the property tax burden worse for many Wisconsinites as a result, and there was also an erosion of the amount given out in the state's Earned Income Tax Credit, until the Federal part of that credit was expanded and adjusted for inflation in 2022.

Evers wanted more state EITC funding in the last budget, and also asked for larger property tax write-offs for veterans' families and increasing the expenses that could be recouped by caregivers, among other ideas. But GOPs didn't go for that either. Seems like that should be pushed for as well, and to either force GOPs to accept those moves, or be seen as ignoring these increasing strains that everyday Wisconsinites are dealing with.

So a real question that should be asked as we approach this state budget isn't "Do we cut taxes", but instead "How do we cut taxes, and who do we choose to help." And if the Dems play things the way they should, they'll be the ones that rightfully ID themselves as the party that gives tax relief to the Wisconsinites that need it the most.