MADISON — Taxpayers could see more long-term tax relief under a bill that would do away with a state tax bracket.
The Senate Financial Institutions and Revenue Committee last week unanimously passed Senate Bill 58, which reduces the state’s four tax brackets down to three. Gone would be the second-lowest bracket, at 4.65 percent. It would save taxpayers about $175 each year moving forward, according to state Sen Dale Kooyenga (R-Brookfield), who authored the bill with Sen. Duey Stroebel (R-Saukville).
Kooyenga, a CPA, says he knows eliminating tax brackets isn’t sexy compared to stimulus checks and rebates, but the measure builds on the Republican-led Legislature’s work of cutting billions of dollars in tax burden over the past decade.
“I know the feds are just cutting checks,” he said of COVID-19-related stimulus payments passed by congress over the last 10 months. “This is genuinely a tax cut and it’s good policy. It’s not for future generations (to pay for),” he said.
Wisconsin’s four tax brackets are 3.54 percent, 4.65 percent, 6.27 percent and 7.65 percent. Getting rid of the 4.65 bracket allows middle income earners to keep more of their hard-earned money, proponents of the bill say.
For individuals, the lowest tax bracket covers those earning less than $12,120 a year. Those making $12,120 to $24,250 pay 4.65 percent. Earners making between $24,250 to $266,930 are in the 6.27 bracket, and those earning more than that pay the highest rate, 7.65 percent.
The Department of Revenue estimates the tax cut would reduce general purpose revenue by about $8.4 million in the current fiscal year, and about $262 million each year thereafter.
While it may cost big government, it’s solid relief to taxpayers over time, Kooyenga said.
“Any tax cut in perpetuity is a big deal,” the senator said. “That’s about $2,000 over a decade.
“Wisconsin workers work hard. This allows them to have more money in their pockets for the hard work they do as opposed to Madison having more money for more programs,” Kooyenga added.
The Republican-controlled Legislature’s tax cuts have saved Wisconsin taxpayers at least $13 billion since 2011, according to a 2019 Legislative Fiscal Bureau report.