Evers vetoes GOP-passed tax cut

Gov. Tony Evers has vetoed three Republican-backed bills that would have slashed taxes for retirees and lower- and middle-income earners, saying the bills would set Wisconsin on a path toward insolvency and leave the state unable to meet its basic duties.

“I have been proud to sign several income tax cuts during my time in office, including keeping — and, in fact, well exceeding — my promise to provide a 10-percent, middle-class tax cut targeted to Wisconsin’s working families,” Evers said in his veto messages. “During my first term in office, I proudly signed one of the largest tax cuts in Wisconsin state history, which provided $2 billion in individual income tax relief over the biennium and approximately $1 billion annually going forward.”

But Evers said the latest tax cut would render the state unable to provide adequate funding for programs and services, including education, health care, child care, public safety, and aid to local governments in the 2025-27 biennium and beyond. 

“If enacted, together, the three bills 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 — also known as the state’s ‘rainy day’ fund — just to provide bare minimum inflationary adjustments to key programs in the 2025-27 biennium,” he said.

Evers said tax relief of the kind he supports, and has enacted, should provide real relief aimed at helping Wisconsin’s working families afford rising costs, but he also said it had to be responsible and sustainable and not cause devastating cuts to priorities like public schools and public safety.

“Republican members of the state Legislature today once again fail to balance these important obligations,” he said.

What’s more, Evers said, in addition to threatening the state’s fiscal health moving forward, if enacted, the bills could result in the state having to repay billions of dollars in federal relief funds it received under the American Rescue Plan Act of 2021. 

“This would completely reverse the progress made in the last five years to improve the state’s fiscal condition even under the best of economic circumstances, jeopardizing critical investments to expand high-speed internet, bolster the state’s workforce, build health care infrastructure, support law enforcement and public safety, and address the child care crisis, among other high-priority needs across the state,” he said.

Fellow Democrat and Senate minority leader Dianne Hesselbein (D-Middleton), who opposed the measure, also said tax cuts need to be targeted.

“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 benefitting those making over $100,000 and likely putting our state at a multi-billion dollar deficit in just a few years,” Hesselbein said. “We should be providing responsible tax relief to working people. Gov. Tony Evers’ 2023-25 budget proposal included a 10-percent middle-class tax cut while also limiting giveaways for the wealthy. Unfortunately, legislative Republicans gutted his proposal.”

Republicans fire back

GOP lawmakers said the bills would help ordinary Wisconsin families and that Evers’s vetoes proved that his talk of supporting middle-class tax cuts was just that — talk.

State Sen. Mary Felzkowski (R-Tomahawk) said the GOP-controlled Legislature had worked throughout the session on different proposals to return tax dollars back to Wisconsin families but the governor continued to veto every tax cut reaching his desk with an overarching message that it targets too high of an income.

But in the latest tax plan, Felzkowski said, the Legislature addressed his concerns and targeted it toward families making less than $150,000. Still, the senator said, Evers decided to keep the money in Madison.

“When the state has a surplus and we’re discussing tax cuts, we have to remember that we’re specifically talking about money that does not belong to the state, that these are your hard-earned tax dollars that are sitting in an account in Madison,” Felzkowski said. “In an effort to get those dollars out the door and back into your family budgets, we drafted four bills that would cut income taxes for families making less than $150,000; exempt up to $150,000 of retirement income from income taxes; increase the married couple credit; and expand the child and dependent care credit.”

And yet the governor made the unilateral decision that middle-class families, including single moms who make $28,000, retired Wisconsinites, and married couples, are doing just fine and don’t need tax relief, Felzkowski said.

“Frankly, that’s a slap in the face to the majority of Wisconsin,” she said.

State Rep. Joel Kitchens (R-Sturgeon Bay) focused his ire on the veto of a tax-free environment.

“We can’t do much about the weather, but we can lower the tax burden on seniors,” Kitchens said. “Two of our neighboring states, Illinois and Iowa, already have a form of tax-free retirement. By vetoing this tax cut for seniors, the governor makes our state less competitive.”

Kitchens said the tax cut made up to $75,000 of retirement income tax-free for single filers, and up to $150,000 of retirement earnings would be tax-free for married-joint filers. 

According to the American Association of Retired People (AARP), Kitchens said, Wisconsin has the second-highest income tax rate in the Midwest. AARP also reported states with low or no income tax are attracting more retirees, the representative said.

“We can’t afford to keep losing seniors to other states,” he said. “When they leave, we don’t just lose revenue. Families miss out on sharing important life events. Wisconsin is sitting on a $4 billion surplus, we can afford this tax cut more than we can afford not doing it.”

Rep. Mark Born (R-Beaver Dam) echoed Felzkowski, saying Evers was moving the goalposts with his definition of ‘middle class.’

“This is another example of the Tale of Two Tonys,” Born said. “One week ago, Gov. Evers said he supports ‘making sure taxpayers are taken care of’ if it is targeted to the middle class. The governor ‘identified middle class as $150,000 and less’ and said ‘that’s still an accurate way to determine it as it relates to tax relief.’”

But Born said Evers showed his hypocrisy by vetoing a tax cut that solely reduced the tax rate on income up to $150,000 for married joint filers. 

“In addition, he vetoed legislation that would have provided significant relief for those on fixed incomes and helped correct marriage penalties in the tax code,” he said. “Gov. Evers’s action is truly disappointing.”

State Sen. Van Wanggaard (R-Racine) said the vetoes struck at the well-being of poorer households in the state. 

“Three times he has vetoed a tax cut for those families,” Wanggaard said. “Three times he said that people who earn $30,000 a year — those who qualify for food stamps — don’t deserve a tax cut. Three times he said a teacher or plumber making $60,000 a year doesn’t deserve a tax cut. Three times he said a family making a combined $100,000 a year struggling with inflation and child care doesn’t deserve a tax cut.”

And now Evers has added that seniors on a fixed income and married couples don’t deserve a tax cut, Wanggaard said.

“Voters and taxpayers need to ask themselves if Evers and Democrats really want a middle class tax cut,” he said. “Because there’s a term for people who say they want to do something and when given the opportunity to make it happen, they refuse. It begins with an ‘L.’”

Richard Moore is the author of “Dark State” and may be reached at richardd3d.substack.com.