Gov. Scott Walker unveiled plans to seek about $340 million in state income tax cuts Tuesday, reiterating his goal to cut taxes by about $200 per Wisconsin family throughout the next two years.
Walker provided more details about the tax cut he will be proposing this spring, which he said is possible because of the state’s projected surplus. The full details will come out next month when he releases his biennial budget.
“We think it’s reasonable to focus in on the [$342 million] surplus,” Walker said, according to The Associated Press. “The taxpayers are obviously at the forefront of making that possible.”
Walker has said before he intends to give the tax cuts to those who make between $20,000 and $200,000 a year. He said returning money to the taxpayers would help grow the economy.
Assembly Speaker Robin Vos, R-Rochester, said he supports tax cuts that total up between $300 million and $350 million, according to The Associated Press.
University of Wisconsin professor and state taxes expert Andrew Reschovsky agreed putting money in the hands of middle class workers means more spending in the state. However, he said, because of Wisconsin’s small size, much of that spending could actually flow out of the state.
“The result is that the income tax cut will do almost nothing to spur economic growth in Wisconsin,” Reschovsky said in an email to The Badger Herald. “The $300 to $350 million cost of the income tax cut will also mean that there are $300 to $350 million [in] fewer resources available to invest in education, health care, transportation and other state functions.”
Reschovsky noted the importance of reinvestment in these pillars as a more practical and productive means of handling the surplus. He said that while some believe investment in such areas will promote economic growth, some will disagree.
UW tax law professor Susannah Camic Tahk said there is still uncertainty over what the tax cut would look like since Walker has not released his budget, so it is tough to say whether they would be effective.
“It is impossible to say whether making income tax cuts is generally a wise decision,” Tahk said. “That depends on too many factors – for example, whose taxes are getting cut, by how much, what other budget needs are out there and so forth.”
Laura Dresser, associate director of the liberal-leaning Center on Wisconsin Strategy, urged lawmakers to consider who is actually benefiting from the tax cuts.
According to Dresser, high-income earners are more likely to save the money or spend it outside the state. She said as low-income earners are more likely to circulate money back into the state economy, tax cuts to them would be more beneficial.
“It’s a matter of whose pockets the money falls into,” Dresser said.
In the long run, however, Dresser said she thinks Wisconsin’s real need is more investment in education and developing the workforce. In the last 10 years, Dresser said, Wisconsin has seen increasing needs in schools and many more children in economic distress.
The Associated Press contributed to this story.