Senator Howard Marklein's Weekly E-Update

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Capitol Update
By Senator Howard Marklein
February 8, 2019
 

We Have Gone Half-Way, But Nobody Has Met Us Yet

Middle Class Tax Cut fulfills Governor's promise and provides tax relief


 
The legislature’s Joint Finance Committee (JFC) on which I serve, approved the Middle Class Tax Cut bill that I co-authored with my colleagues, Senator Dale Kooyenga (R-Brookfield) and Senator Duey Stroebel (R-Saukville). This legislation is headed to the floor of the Assembly and Senate for a full vote. Unfortunately, Governor Tony Evers has already said that he doesn’t like it. I hope he will change his mind and meet us half-way.
 
Our Middle Class Tax Cut is good, bipartisan tax policy that combines Governor Evers’ campaign promise to cut taxes for the middle class with a conservative approach that capitalizes on our projected surplus and strong fiscal management. Our Middle Class Tax Cut will benefit only middle income earners. Taxpayers with incomes under $100,000 will receive 87.9% of the tax cut. A married couple with $75,000 of income will realize a $310 tax reduction.
 
The Republican Middle Class Tax Cut provides tax relief AND continues to fund important priorities such as roads, schools and health care.  We are cutting taxes without taking from one group of taxpayers to pay another.  We are cutting taxes without shifting the taxes from one priority to another. We are sending surplus collections back to the taxpayers.
 
Wisconsin has a surplus of $691 million at the end of the 2019 fiscal year and a projected $1.7 billion in additional revenues over the next biennium. This means that we are starting the next biennium with $2.4 billion more available to us as we begin writing the new budget. This is the most we have started with in at least 20 years!
 
Why do we have dollars to cut taxes? Over the last eight years, we have made significant reforms and have taken deliberate steps to improve our state’s fiscal condition. As a result, our bond ratings have been upgraded. Our Rainy Day Fund is the largest it has ever been at $362 million. We’ve cut taxes by more than $8 billion over the past eight years. The State’s balance sheet, calculated on the basis of generally accepted accounting principles (GAAP), improved by $1.75 billion in the past eight years. And again, we have a rollover balance of $2.4 billion as we begin writing the next state budget.
 
On top of all of these fiscal management achievements, most of the Wisconsin economy is very, very strong. The only economy that is in trouble right now is the Agricultural economy and related businesses, including our Main Streets.  Unfortunately, this is exactly where our Middle Class Tax Cut plan differs from Governor Evers and the Democrats in the legislature.
 
The Governor and Democrats have already told us that they don’t like our tax cut plan because it differs from their plan. They want to change the Manufacturing and Agriculture Tax Credit (MAC) to help pay for their version of the legislation.  They want to take from one group to benefit another. I don’t think any of us want a tax cut at the expense of our neighbors.
 
The MAC is important to many businesses in our communities in the 17th Senate District, especially agriculture-related businesses like ethanol, cheese and yogurt plants. These businesses are our farmers’ market.  Our farmers sell their products to them and buy from them.  Many of our farmers invest in them, as in the case of ethanol plants.
 
The non-partisan Legislative Fiscal Bureau (LFB) told me that about 25%, or $69 million, of the $276 million of the MAC that the Governor and Democrats want to use for their tax legislation would come from agriculture-related businesses.  This means that 25% of the tax relief they would send to you would be at the expense of the agriculture-related businesses in Wisconsin who are facing tough times. I believe that the financial impact in my Senate District would be even greater because of the significant dependence on agriculture in our communities.
 
While I agree with Governor Evers’ idea of an across-the-board 10% income tax cut for the middle class, I disagree with the mechanics of his plan because I do not support taking from one group to benefit another. I especially oppose attacking the agricultural industry or manufacturers. I also prefer to keep our tax code simple.
 
As your State Senator, I will continue to work on your behalf and defend our agricultural businesses of all sizes. I hope that the bi-partisan pledges made at the end of the election cycle were real. I am going half way – but nobody has met me yet.

For more information and to connect with me, visit my website http://legis.wisconsin.gov/senate/17/marklein and subscribe to my weekly E-Update by sending an email to Sen.Marklein@legis.wisconsin.gov. Do not hesitate to call 800-978-8008 if you have any questions or need assistance with any state-related matters.