Evers vetoes Republican-backed bills cutting income, retiree taxes

MADISON, Wis. - Governor Tony Evers on Friday, March 1, vetoed a nearly $800 million income tax cut passed by Republicans, along with bills that would have increased the income tax credit for married couples and raised the amount of retiree income exempt from the state income tax.

Republicans who voted to pass the bills in February said they were designed to make Wisconsin more attractive for families, middle-income earners and retirees. But Democrats said there were better ways to do that.

Republican Sen. Rachael Cabral-Guevara, the main sponsor of the tax cut for retirees, said the veto was "not only a slap in the face to our parents and grandparents, it keeps Wisconsin at a disadvantage when they are looking for where to retire."

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Evers has yet to take action on a fourth bill expanding a child tax credit that had bipartisan support. He has until Tuesday to sign or veto it.

That measure allows qualifiers to match the state credit to the federal child care tax credit. Currently, qualifiers in Wisconsin can claim only 50% of the federal credit. That means the amount of eligible expenses under the state credit would grow from $3,000 to $10,000 for one qualifying dependent and from $6,000 to $20,000 for two or more dependents.

Evers has generally been supportive of that measure but has yet to commit to signing it.

The veto of the income tax cut was expected, as the Democrat Evers has twice rejected similar tax cuts.

The latest bill would have expanded the state’s second income tax bracket, so more income would be subject to a lower rate.

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Currently, the second bracket covers individuals earning between $14,320 to $28,640 and married couples making between $19,090 to $38,190. Under the bill, earnings up to $112,500 for individuals and $150,000 for married couples would be subject to the 4.4% rate, down from 5.3% now.

Evers, in his veto messages, noted his past support for Republican-backed income tax cuts, including a $2 billion one targeting the middle class that he signed in 2021, but said the latest tax cut was not responsible or sustainable.

"I object to fiscally irresponsible measures that would leave the State of Wisconsin unable to meet its basic obligations to adequately fund education, health care, public safety and aid to local government," Evers said in the message.

Evers also vetoed a bill that would have increased the income tax credit for married couples from a maximum of $480 to $870.

The other bill Evers vetoed would have increased the amount of retirees’ income exempt from the state income tax from the first $5,000 to the first $75,000 for single filers. The first $150,000 of retired married joint filers would have been exempt under the proposal.

Evers said signing all three bills would have drained the state's reserves and put it at risk of having to return federal stimulus money. Republicans have rejected those arguments, saying they do not believe the Biden administration would require the state to pay back any stimulus money.

Reaction

Speaker Robin Vos (R-Rochester)

"Despite repeated opportunities provided by Legislative Republicans, Governor Evers refuses to support tax cuts that directly benefit the middle class, even when using defined parameters on what he deems as middle class.

"Even more concerning is the Governor's disregard for Wisconsin's seniors, who stood to gain significant relief from the proposed tax cut. By ignoring their needs and prioritizing political posturing over practical solutions, Governor Evers is failing to fulfill his promise to return the surplus to Wisconsin's families and seniors."

Senator Duey Stroebel (R-Cedarburg)

"In what amounts to a Friday afternoon news dump, Governor Evers has once again chosen to deny middle-class Wisconsinites and retirees meaningful tax relief that would help them address rising costs and soaring inflation.

"Wisconsin’s current budget surplus is just under $4 billion. This surplus is a result of a decade-plus run of fiscal conservatism in both the Senate and the Assembly, which has allowed us to adequately fund our priorities while putting Wisconsin in a strong financial position. The nearly $4 billion budget surplus also tells us that we are over-taxing our residents.

"This budget surplus belongs in the hands of the hard-working taxpayers of Wisconsin, not in the hands of Madison bureaucrats or far left special interest groups. That is why the legislature has made repeated attempts this session to deliver tax cuts for families and return the surplus back to the people. It is unfortunate that Governor Evers has repeatedly blocked our efforts to provide necessary relief for middle-class families despite the legislature’s willingness to come to a compromise.

"The Governor’s vetoes today:

• Deny the average middle-class filer $454 in tax cuts that could be used to help fight the costs of inflation from within their own homes
• Penalize married couples by rejecting the expansion of the married couple tax credit
• Discourage seniors from retiring in Wisconsin and spending time with their grandchildren by making it more expensive to retire in our state

"While Republicans continue to work to return taxpayer dollars to the people of Wisconsin, Tony Evers and legislative Democrats appear to be hell-bent on keeping that money sitting in Madison to grow government and fund liberal pet projects so that they can buy votes and affection heading into an election year."

Representative Barbara Dittrich (R-Oconomowoc)

"To say I am disgusted would have to be the understatement of the year," said Rep. Dittrich. "This overpayment of taxes belongs to the people who paid it. Yet, at a time when Wisconsinites are struggling because of a bad economy, Gov. Evers just can’t keep himself from sitting on and attempting to spend the people’s hard-earned dollars. This veto further illustrates that he was never sincere about the middle class income tax cut he professed to champion.

"The legislation that was vetoed would have returned nearly $454 to each person in the middle class; families facing the rising cost of child care would have received a $656 average tax credit per filer; married filers would have received up to an $870 credit to put more in their pockets; and retirees with less than $150,000 income per year would have paid no income tax. The legislation was fiscally sound and crafted with accountants from the Legislative Fiscal Bureau and members of the Legislature who are professionally involved in finance.

"To stick it to the average Wisconsin resident in this way when they are just trying to get by in this economy sends a loud message in the Governor’s ‘Let them eat cake’ moment today. I believe this action clearly demonstrates for the people who is for a middle class tax cut and who isn’t."

Sen. Patrick Testin (R-Stevens Point)

"Once again, Gov. Evers has turned his back on Wisconsin families that are struggling to make ends meet due to the rampant inflation that is crippling our entire state. Instead of providing our residents with significant tax relief, the governor wants to keep our state’s projected $3.2 billion surplus to himself to further grow government programs, leading to even higher costs in the future.

"When Gov. Evers vetoed the Legislative Republicans’ previous tax cut proposal earlier this session, we tried to reach a compromise by revising our plan to have it align closer to what the governor had requested in his budget. It is so frustrating that Gov. Evers continues to play politics at the expense of our residents. Ever since he was elected, the governor has talked a good game about the importance of compromise. But when it comes time for Gov. Evers to actually walk the walk, it’s always his way or the highway.

"However, even with this latest setback, Legislative Republicans will keep fighting to ensure our state’s surplus is returned to its rightful owners: the hard-working taxpayers of Wisconsin."

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