The leading Republican in Wisconsin’s Senate has floated the idea of cutting taxes next year. Senate Majority Leader Scott Fitzgerald, who announced that he is running for Congress, wants to use new revenue to cut taxes next spring.
In a television appearance promoting his run for Congress last Sunday, Fitzgerald said that if the state has money socked away, he would like to put families in a “better position” through a tax cut.
Wisconsin generated an additional $753 million in tax revenue than it previously anticipated. Democrats want to keep most if not all of the windfall in the state’s rainy-day fund.
Some of the increased tax collections will be offset by lower-than-expected collections of cigarette taxes, sales taxes and utility taxes.
“Perhaps the single most potent argument against the current system of taxation that exists is that many people feel that the income generated from taxes is spent in the wrong manner,” says Scott Langdon of MoneyTaskForce.com. “Countless controversies concerning the allocation or misallocation of funds at both the state and Federal level have arisen since the founding days.”
Wisconsin expects to take in the additional revenue through summer 2021. This would give state lawmakers a small windfall while they work on the next state budget.
Fitzgerald believes that the fund currently has $600 million in it.
Alec Zimmerman, spokesman for Fitzgerald, said they are currently in the early stages of preparing the proposal. No details have been provided on the type of tax cut that Fitzgerald is considering.
Republican Rep. John Nygren wants to see all of the $753 million put in the rainy-day fund just in case the economy softens.
Nygren’s concern stems from moves from Federal Reserve, which has lowered its benchmark interest rate by a quarter of a percentage point twice in two months to stave off a possible recession caused by the trade war with China and a global economic slowdown.
Under state law, $291 million of the additional tax revenue must be put towards the state’s rainy-day fund.
In May, Fitzgerald stated that he wanted to pass a bill that would prevent this from happening, as he believes some of the revenue may come from overpayments that will have to be refunded. Leaving some of the money in the state’s main account would make it easier to pay these refunds.
Additionally, Fitzgerald said that some of the funds may be used for road or maintenance projects.