Spring legislative session to be dominated by talks of tax reform

Written by: Logan T. Carlson and News Herald Media 


MARSHFIELD — With only a few weeks left in the year’s legislative session, and news of a substantial projected budget forecast dominating the political landscape, those expecting substantial legislation to be passed in Madison might be left wanting as lawmakers turn their eyes toward fall elections.
The Department of Revenue announced last week the state is projected to bring in $900 million more in tax revenue during the biennium budget than originally expected, which has set off a firestorm as legislators and special interests vie for the new revenue. Gov. Scott Walker is expected to announce a “significant” tax cut during Wednesday’s State of the State address, the Associated Press reported last week.
The details of Walker’s plan haven’t been released, but it’s expected to be a mix of cuts to property and income taxes, as well as updating withholding tables used to siphon off a portion of employees’ paychecks each week. Doing so would leave employees with more in their paychecks. During an interview in December, Walker said he was “envious” of states that have completely eliminated income taxes.
While legislators have said it’s unlikely a full repeal of the state’s income tax will be brought up, they anticipate some sort of tax reform is likely to happen in the remaining four weeks the legislature is in session this year.
“I would think that the rainy day fund is always going to take part of (those discussion surrounding the new budgetary figures),” said Rep. John Spiros, R-Marshfield. “(The other) part would be another tax break. There’s not a whole lot of time, but we do have enough to do something like that.”
The tax reform discussions would fall on the heels of two substantial tax cuts passed within the last year. As part of the state’s biennium, Walker signed into law a $651 million income tax cut authored by state Rep. Dale Kooyenga, R-Brookfield, followed by an additional $100 million property tax cut passed last fall. While the property tax cut — which came in the form of additional state support for public education — was passed with bipartisan support in both chambers of the legislature, the income tax cut widely was criticized by Democrats for being too lopsided toward the wealthy.
About 40 percent of those with adjusted gross incomes less than $30,000 will see a share of the tax cut, according to Legislative Fiscal Bureau figures analyzed by the Wisconsin Budget Project, a liberal Madison-based organization, while those with incomes more than $300,000 likely will pay $1,440 less this year.
“Instead of tax cuts for the wealthy, we need to focus on a different approach,” said Rep. Katrina Shankland, D-Stevens Point. “Frankly, any discussion of tax reform should focus on reducing the increasing income inequality we are seeing here in Wisconsin and in the nation.”
Shankland criticized last summer’s income tax cut as it had a negligible impact on low- and middle-class workers, a viewpoint not shared by Spiros.
“From my standpoint, all the income tax changes have been positive. When it comes down to it, it typically affects everybody at every level,” he said. “I don’t know why that’s not fair.”
But beyond the anticipated debate surrounding any tax reform initiatives put forward by Walker, the spring legislative session likely will be dominated by what doesn’t get done. A number of bills that have overwhelmingly garnered support of the Republican caucus in the Assembly are likely to not be brought up in the Senate, according to an Associated Press report.
Bills relating to reproductive rights, campaign finance reform and ballot access restrictions all are stalled in the Senate. Walker’s forthcoming tax reform proposal is likely to receive more scrutiny in the Senate, which Republicans currently control 18 to 15.
“I really am very cautious about making a commitment without some serious study about what the implications would be of the changes,” Senate Majority Leader Scott Fitzgerald, R-Juneau, said in an Associated Press report earlier this month when the idea of eliminating the state’s income tax first was floated.
State Sen. Julie Lassa, D-Stevens Point, said the main reason those bills are being shuffled to the side is because 2014 is an election year, and Republicans don’t want to bring up some of the more controversial issues while trying to hold onto power.
“They’ve already passed a number of bills into law that really curtails woman’s rights and equal pay issues. I think that the feeling from that caucus is — at least from the majority Republican senators — is they don’t want to take up these contentious issues because they are now in an election year and have to face the voters in their districts,” Lassa said.
But state Sen. Jerry Petrowski, R-Marathon, said it has less to do with politics and more to do with how the bills still are works in progress.
“We’re looking at different things we can do, and maybe amend some of the bills for different reasons,” he said. “It’s an ongoing process. I know there are some bills out there, I don’t know if people have problems with, but maybe we can adjust them to make them accessible.”
Any talks of what to do with increased revenue projections should focus on paying the state’s bills, Petrowski said.
“At the end of this biennium, it’s important we use that money to pay our bills, pay down our structural deficit,” he said. “After that, we can talk about how we can invest and create jobs.”