Long-term, transformational tax changes a top priority for GOP leaders next year

 

MADISON, Wis. (CBS 58) -- Major and transformational tax changes are a top priority for Republican legislative leaders now that Wisconsin has a record $6.6 billion projected state surplus.

"It's exciting we can make transformational tax changes in Wisconsin to make us more competitive than our neighboring states and hopefully keep business in this state," said Senate Majority Leader Devin LeMahieu (R-Oostburg), who appeared at a WisPolitics panel with Assembly Speaker Robin Vos (R-Rochester) Tuesday.

Vos said he wants to implement long-term tax cuts instead of issuing temporary relief, referencing Governor Tony Evers' election year proposal to send $150 to every Wisconsin resident by using a portion of the state surplus.

LeMahieu also said he supports implementing a flat tax and eliminating the personal property tax paid by businesses, two proposals Evers has previously opposed.

Leading up to November's election, Evers' opponent, Republican Tim Michels, was open to a flat tax. Democrats reject the idea because economists say it would largely benefit the rich. Last week, Evers said he's unlikely to sign a budget that would cut taxes for the state's top earners.

In order to enact a flat tax without significant spending cuts, the new flat tax rate would have to be 5.22%, according to an analysis by the nonpartisan Legislative Fiscal Bureau. If that were implemented, projections show about 73% of tax filers would see an increase of $249 per year, on average.

When asked about the criticism, LeMahieu said, "We're going to do income tax cuts across the board to make sure everyone receives tax cuts."

Evers wants to enact a 10% tax cut for the middle class. He proposed the plan in August, which would apply to individuals making $100,000 or less and married couples earning $150,000. GOP leaders opposed the plan.

While both sides want to cut taxes, reaching an agreement remains to be seen.

Vos and LeMahieu said Evers reached out to them recently to arrange a time to meet, something that's rarely happened.

Vos said he spoke to Evers on the phone for five minutes and hopes to find a compromise next year.

“That was five minutes more than the past two years,” Vos said. "Where are some areas he's willing to take and give on? Perhaps his party believes that "X" should happen, but he is willing to flex off of that because that's how negotiation actually occurs."

Sales Tax Increase

Milwaukee County leaders will have to do more convincing if they want permission to raise their sales tax by 1%.

Vos said he opposes giving Milwaukee that ability because "revenue without reform isn't going to happen."

"That's why I am so reluctant to say just give them 1% more, because they have been awful with how they have managed their money in the past."

Milwaukee County Executive David Crowley warned without a sales tax increase, they will experience significant budget woes in the future.

State and local leaders have been advocating for an increase since 2019. Under current law, counties can only increase an additional 0.5% raise on the hotel tax - but nothing else.

Sales tax in Illinois, Michigan, and Minnesota range from 6% - 6.8%.

School Funding

Vos and LeMahieu said they'd be willing to increase funding for K-12 schools in exchange for expanding school choice, a voucher program that allows students to attend a private school.

Evers also said last week he doesn't see how you can do both.

“I want to see the numbers," said Evers. "But I don’t know how you can expand choice and fully fund schools."