Wisconsin GOP passes resolution supporting income tax elimination

News analysis

It was pretty much a run-of-the-mill state Republican Party convention in May over in Appleton — notwithstanding some expected fireworks involving Assembly speaker Robin Vos — with the GOP passing resolutions that have become mainstream for the party but that Democrats call extremist.

Among other things, and without debate or rancor, convention goers passed advisory resolutions calling for the state to resolutely defend its sovereign rights and to be unyielding in resisting and defying all unconstitutional actions of the federal government.

The party also called for the state to protect Second Amendment rights and to place liability for “life and limb” upon organizations, government or private, that prohibit the right of self-defense on their premises. In addition, the party went on record supporting the elimination of liability protections for social media and tech giants and standing up for free speech and open debate.

The resolutions themselves lacked debate, though not because it wasn’t allowed. There was unanimity even for one proposal that, so far, the entire party — or at least its elected lawmakers — hasn’t come around to embracing: Eliminating the state income tax.

That issue is a significant illustration of a lingering divide between the party’s grassroots and its establishment.

In the last session, lawmakers opted to pursue a “flat tax” — which retained progressivity at its core (keeping a sliding scale standard deduction, as well as child care and earned income tax credits, and educational tax credits, all affecting the final taxable income where the flat rate is applied — rather than embracing a complete elimination of the tax, despite support for elimination from such party stalwarts as former Gov. Scott Walker and from such powerful groups as Wisconsin Manufacturers & Commerce (WMC).

Practically speaking, because a Democrat is governor, that legislative decision didn’t make much of a difference. Ideologically speaking, it makes a lot of difference. Critics of a flatter tax, while agreeing it is better than today’s deeply progressive tax, point out that it is still an income tax that allows future special exceptions and special interest “carve outs.” 

At the forefront of pushing for the elimination of the income tax has been the conservative think tank, the Institute for Reforming Government (IRG), and, as the state convention approached, it was once again touting the proposal. The group pointed out going into the convention that the proposed resolution was approved unanimously by two congressional district caucuses, and the convention indeed followed suit.

While IRG has issued substantive proposals about eliminating the tax, the resolution itself was barebones. It pointed out that there are states that do not levy a tax on personal income, arguing that “many people have left the state of Wisconsin to pursue careers and to enjoy retirement in states with no income tax.” 

The resolution called upon the legislature to make Wisconsin a tax-free state to remain and attract residents and promote business opportunities.

Crushing dreams

CJ Szafir, IRG’s CEO, has been at the forefront of the campaign to eliminate the tax since 2021. Szafir says Wisconsin families and small businesses are being crushed by the state’s high income taxes and overall tax burden. 

“Wisconsin’s high income tax hurts workers and families,” Szafir said. “And it hurts small businesses, many of whom pay taxes through the income tax. It’s exciting to see grassroots support for eliminating the income tax grow. If lawmakers and Gov. Evers are serious about wanting to strengthen our economy and help workers, there is no better policy they could tackle in January 2025 than eliminating the state’s income tax.”

By passing the resolution, Szafir said the GOP grassroots showed its strong support for lawmakers to eliminate the tax in 2025. 

In addition to Walker, Szafir said public supporters of repeal have included legislators such as Senate president Chris Kapenga, state Sen. Rob Hutton, former state Sen. Roger Roth, and state Rep. Adam Neylon, as well as multiple candidates for statewide office including gubernatorial candidate Rebecca Kleefisch.  

The plan to eliminate the income tax that was introduced in December 2021 was supported by IRG, WMC, Americans for Prosperity-Wisconsin, Trump economic advisor Steve Moore, ALEC’s (American Legislative Exchange Council) chief economist Jonathan Williams, Leah Vukmir and the National Taxpayers Union.

IRG points to Wisconsin’s top income tax rate of 7.65 percent as the ninth highest rate in the country and the second highest in the Midwest. Szafir also says it is a small business tax because nine out of 10 employers, employing over half of all workers, pay taxes through the individual income tax.

Then, too, IRG touts polling that shows strong support for what it calls transformational income tax reform, including a 2022 poll in which 59 percent said state taxes were too high, and a plurality supporting elimination of the income tax, including a majority of Republicans, a plurality of independents, and 40 percent of Democrats.

In 2021, IRG introduced a substantive plan on how to repeal the tax. According to a study conducted by the Center for Research on the Wisconsin Economy’s (CROWE) Noah Williams, the tax cut would help save the average Wisconsin family $1,700 per year. Under the plan, the income tax would be replaced with a higher sales tax.

Specifically, the study, “Fundamental State Tax Reform: Eliminating the Income Tax in Wisconsin,” urged replacing a substantial portion of income tax revenue with a 3-percent bump in the state sales tax. According to the analysis, such a reform would lead to a $3.5 billion tax savings statewide, or an annual average of $1,700 per household.

The study also found that eliminating the income tax at that time would have increased take home pay by 9.4 percent while helping employers hire 175,000 new workers. Eliminating the income tax would also make Wisconsin the 10th state without a personal income tax on wages and would be the only such state in the Midwest, the study stated.

In the report, Williams said that the vast majority of employers in Wisconsin, almost 90 percent, are pass-through entities, which means they actually file taxes as individuals. On average, the report stated, a pass-through employer in Wisconsin has under 13 workers, so eliminating the income tax would put more money into workers’ paychecks, while also helping employers put capital into the company to grow and expand.

The report also estimated that eliminating the income tax would boost employment by 175,000 people after implementation — an increase in projected employment due to larger take home paychecks encouraging people to return to the workforce, as well as pulling new workers, families, and entrepreneurs into Wisconsin.

Officials at Wisconsin Manufacturers and Commerce (WMC) said eliminating the income tax would curb the out-migration of workers from the state.

“In order to draw more people into our state, Wisconsin must be willing to do something bold,” said Kurt Bauer, WMC president and CEO at the time. “The latest census data shows people are migrating to low-tax states, while they are fleeing high-tax states. Becoming the only state in the Midwest without an income tax would serve as a beacon to workers and families looking for low costs, a high quality of life and ample career opportunities.” 

IRG says 60 percent of people who leave Wisconsin move to states with low and no income taxes, moving $2.6 billion of income to those states. 

Despite the comprehensive study and despite impressive endorsements, Republican candidates for governor in 2022 refused to embrace the policy position, instead campaigning on a vague platform of tax reduction. 

States currently without a personal income tax include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. 

Back at the ranch

Meanwhile, other resolutions passed at the GOP state convention called for the impeachment of the state’s top elections official, Meagan Wolfe, who is the administrator of the Wisconsin Elections Commission.

The resolution accuses Wolfe of repeatedly abusing the powers of her office “to subvert, bend, and break Wisconsin election laws in an effort to help Democrats cheat their way to election victories,” and of refusing to appear before the state legislature when summoned there to explain herself.

What’s more, the resolution states, “Meagan Wolfe’s term of office has expired and Democrats have been twisting the law to try to keep her in office indefinitely.”

The GOP embraced enforcement of certain immigration policies, such as Remain in Mexico, deporting illegal entrants, and for sending the National Guard to border states to defend the country’s borders.

The convention also endorsed a pause of refugee resettlement in the state, the adoption of universal school choice, and prohibiting anyone under the age of 21 from being castrated or otherwise chemically or surgically mutilated, or to be given puberty blockers or opposite sex hormones, or provided with any other “so-called gender affirming care.”

That same resolution calls for prohibiting biological males from competing in athletic events designated for women or girls; and supports that no one be allowed to use a public restroom or locker room designated for persons of the opposite biological sex unless one has been so surgically mutilated as to appear to be of the opposite biological sex even when naked.

Finally, the resolution urged prohibiting public and private schools from treating a biological boy as a biological girl, or vice-versa, without the express written consent of that child’s parents; and that no one be subjected to any punitive action for treating someone in a manner consistent with that person’s biological sex.

The state party also requested that the state place land ownership restrictions upon foreign principals connected with foreign countries of concern, i.e. foreign governments themselves, certain corporate and political bodies, and individuals domiciled in the countries of concern who are not U.S. citizens or lawful permanent residents.

Finally, the convention called for supporting Israel and condemning Hamas, and that maximum federal funding be made available to obliterate Hamas and any of the terrorist organizations that threatened the safety and security of Israel and its citizens.

While most if not all of those planks have become Republican Party mainstream policy, Democrats said they represent extremist beliefs, including state Sen. Melissa Agard (D-Madison).

“The advisory resolutions demonstrate the GOP’s objectives for the next year,” Agard said. “Some of the resolutions include barring trans youth from participating in organized sports, preventing mandatory vaccinations, abortion bans, opposing universal background checks, condemning Critical Race Theory, and counting ballots by hand on Election Day.”

The advisory resolutions show how increasingly extreme the GOP has become, Agard said.

As policy makers, Agard said, lawmakers have an obligation to the people they represent to work for common interests and shared goals to help move the state forward.

“These resolutions do not prioritize the issues that so many Wisconsinites care about, such as clean water and air, accessible and affordable healthcare, and legalizing cannabis,” she said. “Instead, they only prove that the GOP platform is built upon extremist ideologies that move our state backwards. It’s clear the Republicans are out of touch with Wisconsin values and are unwilling to do the right thing for their constituents.”

While the GOP perpetuates their extremist agenda, Agard said Democrats must do everything they can to protect the integrity of the state of Wisconsin.