MADISON, Wis. (AP) - The typical home-owning Wisconsin family would save about $150 a year under property and income tax cuts Gov. Scott Walker plans to outline in his State of the State speech before the Legislature on Wednesday.
In a briefing with reporters on Tuesday, Walker said he will be proposing a property tax cut that would lower the tax bill of a median-valued $151,000 home by $101. He’s also seeking a reduction in the lowest income tax bracket, for individuals who earn up to $10,910, resulting in a tax cut of between $44 and $58.
The two tax cuts - costing about $504 million - would be on top of a $100 million property tax cut and $650 million income tax reduction approved last year. Walker’s tax cut plan will be the centerpiece of his fourth State of the State speech before a joint meeting of the Senate and Assembly.
Republican leaders of the Senate and Assembly praised the plan.
“That’s exciting,” Republican Senate President Mike Ellis said of property tax cut. “That’s fantastic. It’s significant.”
Republican Assembly Speaker Robin Vos said he briefed members of his caucus on the plan, and they were supportive.
“I feel very confident that the Assembly Republican position is going to be pretty closely aligned with the governor’s plan,” Vos said.
The tax cut proposal comes as Walker faces re-election in November. Walker, who is considering a 2016 run for president, is being challenged by Democrat Mary Burke, a former Trek Bicycle Corp. executive.
Walker will also be ordering the Department of Revenue to update income tax withholding tables, which will result in a typical family of four keeping about $58 more a month. That is money they would have gotten back in their income tax return regardless and isn’t a new tax cut, but it does put more money in people’s pockets starting in April.
Walker said his plan, made possible by tax collections that exceeded original estimates by $912 million, was designed to benefit all taxpayers.
“We’ve got a strong recovery but we want to make sure we don’t leave anybody behind,” Walker said.
Republicans control the Senate and Assembly and can pass whatever they want without a single Democratic vote. Still, Democrats and advocacy groups have been urging Republicans to consider using the surplus for other needs.
Before any tax cuts, Democrats want to restore cuts Walker and Republicans made to public schools and technical colleges, reduce $2 billion in additional bond spending, and lower ongoing spending commitments that create the $725 million shortfall in 2015. That projection does not account for increases in state tax collections, changes in state law or any other factors between now and then that could affect the state’s bottom line.
“For us, we’d like to see tax cuts but we have to make sure that the essential obligations are taken care of,” said Senate Democratic Minority Leader Chris Larson.
Democratic Assembly Minority Leader Peter Barca, who along with Larson met with Walker earlier on Tuesday, said the real test will be how all elements of the plan affect the middle class.
Barca also said it was “irresponsible” to increase the projected budget shortfall by roughly $100 million, as Walker’s plan would do. Walker said the best way to address that was through strong revenue growth, and his tax cuts will help grow the economy.
Ellis, the Republican Senate president, also praised updating income tax withholding amounts, but wasn’t sold on cutting the income tax rate. The income tax cut would reduce the lowest bracket from 4.4 percent to 4 percent. That would lower annual tax collections by $98.1 million.
The property tax cut, which would be done by reducing the technical college levy by 89 cents per $1,000 of value, costs $406 million. Walker said that was being done as a mechanism to lower property tax rates statewide, not as the beginning of replacing the technical college property tax levy with state money.
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