by Benjamin Yount
Wisconsin’s Senate majority leader says there is plenty of money available to reconfigure the state’s personal income tax rates.
State Sen. Devin LeMahieu, R-Oostburg, on Friday said Wisconsin’s record $6.6 billion surplus will help get the state over the hump.
“So, for sure in the first two years of the budget we’ll have plenty of revenue,” LeMahieu said.
His proposal would move Wisconsin from a top personal income tax rate of 7.65% to a flat rate of 3.25% for everyone by 2026.
LeMahieu estimates that his plan will save taxpayers $5 billion.
“It maybe looks a little daunting in years three and four,” Lemahieu said of the impact on state coffers. “When other states have done this, sales tax revenue goes up, and other revenue goes up because there’s more money in the system. It changes people’s spending habits.”
LeMahieu said Wisconsin’s economy has grown over the past several years, and he expects that to continue.
He also said lowering the tax rate to 3.25% would make Wisconsin the lowest among its neighbors.
Minnesota’s income tax rates start at 5.35%, while Illinois, Iowa and Michigan all have flat taxes that are or would be higher than LeMahieu’s proposed rate.
“At that new rate, only 11 states will have a top individual income tax rate lower than Wisconsin,” LeMahieu said.
The Badger Institute, a free market think tank in Wisconsin, supports the measure.
“Moving forward with a flat tax with a low rate will benefit everyone – small business owners who create jobs, individuals looking to earn more or keep more, folks who aspire to start businesses themselves and would like to do it in Wisconsin,” Badger Institute President Mike Nichols said. “Right now, we’re nowhere near competitive. … Our neighbors will be thrilled if we remain complacent. They’ll gladly steal our companies, our jobs and our tax revenue.”
Republicans at the Capitol have made tax reform one of their top priorities for the new year.
Assembly Speaker Robin Vos has said he would support a flat tax or other income tax cut.
Democratic Gov. Tony Evers, on the other hand, is already criticizing the proposal.
“When we deliver tax relief, it should be targeted to the middle class to give working families a little breathing room – not to give big breaks to millionaires and billionaires who don’t need the extra help to afford rising costs,” the governor said Friday on Twitter. “That’s just common sense.”
Evers’ Department of Administration said in the past that LeMahieu’s previous plan of a 3.5% flat tax would cost the state $4 billion if no other taxes were raised, and no new revenue was found.
The governor instead wants a progressive income tax that taxes top earners, and many small businesses, even more.
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Benjamin Yount is a regular contributor to The Center Square.
Photo “Devin LeMahieu” by Senator Devin LeMahieu. Background Photo “Wisconsin State Capitol” by Teemu008. CC BY-SA 2.0.
THIS IS truly THE ONLY FAIR TAX!!! I BELIEVE IT SHOULD BE DONE NAATIONALLY!!!
https://www.congress.gov/bill/117th-congress/house-bill/25?s=1&r=5
Even illegals will pay taxes when they buy goods here.