Wisconsin Senate leader pitches flat tax

(The Center Square) – Wisconsin’s Senate majority leader says there is plenty of money available to reconfigure the state’s personal income tax rates.

Sen. Devin LeMahieu, R-Oostburg, on Friday said Wisconsin’s record $6.6 billion surplus will help get the state over the hump.

“So, for sure in the first two years of the budget we’ll have plenty of revenue,” LeMahieu said.

His proposal would move Wisconsin from a top personal income tax rate of 7.65% to a flat rate of 3.25% for everyone by 2026.

LeMahieu estimates that his plan will cost $5 billion.

“It maybe looks a little daunting in years three and four,” Lemahieu said. “When other states have done this, sales tax revenue goes up, and other revenue goes up because there’s more money in the system. It changes people’s spending habits.”

LeMahieu said Wisconsin’s economy has grown over the past several years, and he expects that to continue.

He also said lowering Wisconsin’s tax rate to 3.25% would make Wisconsin the lowest among its neighbors.

Minnesota’s income tax rates start at 5.35%, while Illinois, Iowa and Michigan all have flat taxes that are or would be higher than LeMahieu’s proposed rate.

“At that new rate, only 11 states will have a top individual income tax rate lower than Wisconsin,” LeMahieu said.

Republicans at the Capitol have made tax reform one of their top priorities for the new year.

Assembly Speaker Robin Vos has said he would support a flat tax or other income tax increase.

Democratic Gov. Tony Evers, on the other hand, is already criticizing the proposal.

“When we deliver tax relief, it should be targeted to the middle class to give working families a little breathing room – not to give big breaks to millionaires and billionaires who don’t need the extra help to afford rising costs,” the governor said Friday on Twitter. “That’s just common sense.”

Evers’ Department of Administration said in the past that LeMahieu’s previous plan of a 3.5% flat tax would cost the state $4 billion if no other taxes were raised, and no new revenue was found.

The governor instead wants a progressive income tax that taxes top earners, and many small businesses, even more.