State Views: Tax cuts now the status quo in Wisconsin
Wisconsin’s economic outlook continues to shine, and positive economic news has become the norm rather than the exception. The real estate market is coming back, as home sales increased more than 10 percent and home prices rose more than 7 percent last year. Wisconsin’s unemployment rate of 6.2 percent is the lowest in five years. In 2013, Wisconsin exported $23.1 billion worth of goods, a $1 billion increase compared to 2011 and a $6.4 billion increase above 2009.
Last year, the Legislature passed an impressive $1 billion tax relief package, including an income tax cut of more than $650 million, one of the largest tax cuts in state history. Also, $100 million in additional property tax relief was provided last year. Now, the nonpartisan Legislative Fiscal Bureau shows the state’s General Fund revenue is projected to be $911 million higher than anticipated, including an expected tax revenue increase of more than $892 million.
The Legislature and Gov. Walker decided the massive surplus should be returned to taxpayers in the form of income and property tax cuts. The surplus is also being used to lower overall state spending, with a portion used for job training grants to grow Wisconsin’s workforce.
Recently, the Senate passed Special Session Senate Bill 1, which includes a $500 million tax cut. The bill cuts income taxes by more than $98 million and provides approximately $400 million in aid to technical colleges to create additional property tax relief. According to the fiscal bureau, property taxes on a median-valued home will decrease by $131 on this year’s tax bill, on average.
The bill will zero out income taxes for manufacturers and lower income taxes for factory and farm owners by $36.8 million over the current two-year budget, and $91.3 million over the next two years. The bill is awaiting final action by the Assembly.
In addition to the income and property tax relief, the governor is directing the Department of Revenue to adjust income tax withholding rates beginning in April of this year. These will lead to workers keeping more of their paychecks. This will result in a tax savings of more $320 million over two years.
The tax cuts passed last year coupled with these new tax cuts add up to $2 billion. That is an impressive number, particularly here in Wisconsin, when tax increases and budget deficits once reached those numbers. Property taxes in 2014 are estimated to be lower than they were in 2010, another much-welcomed sign for taxpayers.
Wisconsin’s economy continues to grow, and efforts to cut taxes have had a direct impact on that growth. Businesses have more capital to use, and customers have more disposable income to spend or save.
Cutting taxes is more than a slogan; it is a fundamental principle that government should not spend beyond its means, and then require taxpayers to pay more to fund poor spending habits. It is also a proven component to economic improvement, one that has been overlooked for too long.
Sen. Neal Kedzie, R-Elkhorn, represents the 11th Senate District. Contact him at Room 313 South, state Capitol, P.O. Box 7882, Madison, WI 53707-7882; phone 608-266-2635; email Sen.Kedzie@legis.Wisconsin.gov.