Gov. Walker announces changes to tax withholding

MADISON (WITI) -- Big changes coming to your paycheck! Starting Tuesday, April 1st, the state government is withholding less of your income. It's all part of Gov. Scott Walker's plan to get more money into the hands of consumers -- but not everyone agrees that it's the best plan.

"We're going to start taking less out of your paycheck for withholding," Gov. Walker said.

Under Gov. Walker's orders, the Wisconsin Department of Revenue is now taking less money out of your paycheck.

"It was your money all along," Gov. Walker said.

On a stop at a Milwaukee factory on Tuesday, April 1st, Gov. Walker highlighted the changes to the state's withholding structure.

Here's how withholding works:

Employees fill out their tax forms, the employer calculates the estimated taxes, deducts part of the pay and sends it to the government. If you gave too much, the government returns it in a refund.

"We think its important to get that money in the hands of people now so they can get it into the economy," Gov. Walker said.

Gov. Walker says the Department of Revenue is now putting it back in your paycheck.

The average Wisconsin family of four will take home about $500 more than under the old guidelines.

"That's real money. On top of the property tax relief we talked about last week -- this is putting more money back in the hands of the hard-working taxpayers," Gov. Walker said.

Democratic candidate for governor Mary Burke says the withholding changes amount to smoke and mirrors.

"It doesn't put any more money into people's pockets. It simply is changing the timing, and I of course have concerns about the irresponsibility of spending money that we don't have here in Wisconsin. This is all based on a projected surplus that is 18 months away after adding debt," Burke said.

Gov. Walker argues the state is over-withholding.

In 2011, the Department of Revenue refunded $1.3 billion.

"We'll see more tax relief next year, but for now, it just gets that money back in the economy quicker," Gov. Walker said.

"The real way we're going to reduce taxes in the long-term is we have to have a growing economy," Burke said.

Gov. Walker says the withholding changes will have no effect on the state's ability to pay for services and programs. Burke says tax structure changes should be made based on money in hand -- not a projected surplus.