The Middle Class Tax Cut
A January 30, 2019 memo released by the non-partisan Wisconsin Legislative Fiscal Bureau estimates tax collections over the next two years will increase by $1.8 billion. The surplus from the 2017-2019 biennium is expected to be almost $600 million, leaving the governor and legislature with nearly $2.4 billion in new revenues with which to develop the 2019-2021 budget.
Bureaucrats in Madison are already announcing new projects and programs for spending the additional revenue. But first, shouldn’t we realize there is a surplus because the state over collected taxes, or in other words, you the taxpayer overpaid!
Wisconsin’s Comprehensive Annual Financial Report for the fiscal year ending 2018 states the following: “Strong economic growth bolstered tax collections, led by strength in individual income taxes.” Individual income taxes collected rose 5.5% and sales and use taxes increased 4.3%.
I’ve co-sponsored Assembly Bill 4 “The Middle Class Tax Cut” which will cut taxes on single filers earning under $100,000 and joint filers earning under $150,000 per year.
The middle class tax cut will provide $340 million in overall tax relief and will benefit nearly 2 million tax filers. A median-income family filing jointly will see a $310 reduction in net taxes. Furthermore, filers with incomes between $30,000 and $100,000 per year will realize 75% of the total tax cut while joint filers earning between $30,000 and $40,000 will have their tax liability nearly halved.
The tax cut will be implemented by increasing Wisconsin’s standard deduction. Under current law Wisconsin provides a sliding scale standard deduction that decreases as income increases. For tax year 2018 the maximum standard deduction for a single person is $10,860 and for joint filers is $20,110.
The Middle Class Tax Cut upon becoming law, would increase the standard deduction to $13,360 for single Wisconsin filers and $24,740 for joint filers. This is approximately a 10.5% decrease in income tax liability making Wisconsin one of the most generous standard deductions in the country.
In order to find bipartisan agreement and reduce the tax burden, we have developed this proposal to fulfill Governor Evers’ campaign promise to cut taxes on single filers earning under $100,000 and joint filers earning under $150,000 per year without raising taxes on Wisconsin farmers and manufacturers.
Wisconsin has a solid surplus and a bright economic future. The Middle Class Tax Cut will be a great bipartisan start to the new session.