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Republican leaders to pursue ‘transformational tax changes’

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Republican leaders to pursue ‘transformational tax changes’

Nov 23, 2022 | 8:00 am ET
By Baylor Spears
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Republican leaders to pursue ‘transformational tax changes’
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Assembly Speaker Robin Vos (center) and Senate Majority Leader Devin LeMahieu (right) at a lunch-time panel moderated by Jeff Mayers (left) of WisPolitics. Photo by Baylor Spears/Wisconsin Examiner

Wisconsin’s top Republican leaders emphasized the potential for compromise in the coming legislative session as they pursue major tax changes and consider changes to school funding on Tuesday. 

Assembly Speaker Robin Vos (R – Rochester) and Senate Majority Leader Devin LeMahieu (R – Oostburg) agreed during a lunch-time panel hosted by WisPolitics that tax reform is one of the top priorities for the state’s budget surplus, which the Department of Administration estimated will grow to more than $6.5 billion by the end of the current fiscal year, June 30, 2023.

“Surprisingly, our side isn’t looking just to spend money,” Vos said. “We’re looking to reduce taxes.” 

LeMahieu said he will pursue “transformational tax changes” throughout the state by eliminating the personal property tax and working toward a flat income tax. He said the changes would make Wisconsin more competitive than its neighboring states and help keep businesses in the state. 

“My goal would be to first eliminate personal property tax, which is something that [Evers] unfortunately vetoed,” LeMahieu said, adding that he plans to work on tax reductions for taxpayers in every bracket “so that way all taxpayers get a tax cut, but we definitely need to drive down our top rates.” 

The personal property tax is one of the oldest taxes in Wisconsin. It originally applied to all personal property for individuals as well as businesses but is now a tax paid by businesses on only limited categories of business property. The tax once applied to any items purchased by a business, and items were taxed as long as a business owned it, but lawmakers have passed many exemptions to minimize the tax.

Republicans introduced a standalone personal property tax repeal bill during the last session. Evers vetoed it citing potential ramifications including the loss of taxes on utility companies and impact on railroad taxes. He also objected to Republicans’ “unusual and haphazard” process, which, he said, created these effects. He later introduced a replacement bill to repeal the tax that wasn’t taken up. 

The flat tax system would be a dramatic change from the current, graduated tax system, in which income tax rates increase as income increases. Individual income taxes in Wisconsin range from 3.54% to 7.65%. 

Senate Minority Leader Melissa Agard (D-Madison) tweeted Wednesday afternoon that voters rejected the idea of flat taxes when they didn’t elect Republican gubernatorial candidate Tim Michels this month. She criticized legislative leaders’ tax proposal, writing, “A flat tax is highly regressive and would overwhelmingly benefit the richest people in our state, while raising taxes on the vast majority of Wisconsinites.” 

Evers also criticized  flat tax proposals while on the campaign trail. 

Vos and LeMahieu emphasized their view that tax changes need to be permanent reform, rather than one time actions to return money to Wisconsin residents. When asked about the prospect for rebates to put money back in Wisconsinites’ hands, Vos criticized Evers’ proposal of $150 rebates for Wisconsinites earlier this year as “gimmicky.”

“We tried that under [Republican Gov. Scott] Walker, and I did not think it was anywhere near as successful as it should’ve been,” Vos said. “Just sending out a check to everybody who happens to live in the state, doesn’t necessarily serve a purpose to say to people, ‘Stay in Wisconsin. Don’t move. Relocate your businesses here.’”

The top leaders, apart from tax reductions, said they would be open to using the surplus to invest in roads, local governments, and compromise on education spending.  

Education was a major issue during recent elections as Democrats urged for expansion of support for public schools and Republicans endorsed universal school choice programs, which would get rid of caps on who could receive vouchers to attend private schools in the state. 

Vos said he would be open to going to his caucus to request more public school spending — as Democrats have proposed — if Wisconsin’s school choice program is also expanded. 

“I don’t know why we couldn’t say, ‘Pick any school that you want, public or private,’” Vos said. 

Vos highlighted multiple ways to expand school choice in Wisconsin, so that parents in the state could receive vouchers to attend private schools or decide which public or charter schools their children could attend without barriers. 

Vos called current income caps for Wisconsin’s school choice program arbitrary, saying they could be done away with. Wisconsin’s statewide school choice program currently allows families at or below 220% of the federal poverty level to qualify for vouchers to private schools. The limit is 300% of the federal poverty level for the Racine and Milwaukee programs. 

Wisconsin’s school voucher program’s enrollment cap on the number of students who can participate will phase out by 2026-27 school year. 

Vos also said changes could also be made to Wisconsin’s open enrollment period, during which parents can apply for their children to attend a public school in a school district other than the one they reside in. Currently, school districts can deny applications for reasons enumerated in state law, including if space is not available in a district’s schools, programs or classes.

“We could get rid of the ability for a school district to say no,” Vos said. “So, a parent gets to make the choice between leaving the public school in one town and going to the public school next door.” 

LeMahieu agreed that expansion of school choice would benefit parents. He said, however, potential negotiations on the issue could also mean “moving the football” or changing what the goal is. For example, he said income limits could potentially be extended rather than lifted altogether. 

“If we can get some big wins, we can also give on some issues and find some of that common ground and negotiate,” LeMahieu said. “I don’t want to be sitting here in four years with $30 billion dollars in surplus because we can’t get anything done in the next term.” 

The coming legislative session will again see a Republican-led Legislature and a Democratic governor hashing out different views on policy and the budget. LeMahieu acknowledged that the relationship between the two sides hasn’t been the best, however, there is the potential for more communication in the coming session, he said. 

The top Republicans said Evers reached out to each of them recently. Vos said he spoke to Evers for about five minutes, and that they agreed they’ll find a time to sit down and negotiate. 

Senate Republicans also obtained a two-thirds majority during this month’s elections. The majority could potentially be used to impeach officials or expedite bills. Vos pointed this out in a recent interview, saying the body could remove people “who aren’t doing their job.” 

LeMahieu said this is not a power that his caucus will be actively seeking to use in the new session. 

“We’re not looking to go out there and start impeaching people,” LeMahieu said. “Obviously that’s something in the state statute and if something arises to do that, but it would be incumbent on the Assembly to act first, then we’d have to have a proceeding in the Senate.” 

He said he is looking forward to working with Minority Leader Melissa Agard, who was elected to the leadership position last week. 

“I had a great relationship with Sen. [Janet] Bewley as minority leader and I look forward to developing that relationship with Sen. [Melissa] Agard. I think it’s just working together, just keeping the floor running smooth,” LeMahieu said. “So, I mean, obviously those options are there but we don’t want to use those options.”