Analysis: Kooyenga Tax Cuts Would Raise Deficit

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Budget experts say the state of Wisconsin’s structural deficit would grow under a tax cut proposed by Wisconsin Rep. Dale Kooyenga (R-Brookfield).

Kooyenga’s tax cut would drop tax rates for all income brackets, increasing the size of Governor Scott Walker’s proposed tax cut by roughly $420 million. Kooyenga says it would be paid for by new revenue growth projected for the next two years.

The nonpartisan Legislative Fiscal Bureau, however, says Kooyenga’s tax cut would grow to $914 million in the following two-year budget. Budget expert Jon Peacock with the Wisconsin Council on Children and Families calls the proposal “disappointing.”

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“It creates a very large hole in the next biennial budget, and it undermines the state’s ability to invest in things like K-12 education that are critical for the state’s future economic competitiveness.”

When Kooyenga introduced the plan, he said the state has two choices when it expects new revenue: grow government or return money to the private sector. Todd Berry, with the Wisconsin Taxpayers Alliance, says that ignores a third choice: save the money until it’s actually in hand.

“That, frankly, has been a problem for every governor and legislator as long as I can remember.”

Berry, who has long advocated for a simpler tax code, favors other parts of Kooyenga’s plan that would end a variety of tax credits.

“There’s a lot of tax law items here that are used by practically no one and involve very little money, and I think you can justifiably get rid of them.”

But ending those credits only saves the state about $5 million a year, meaning they don’t come anywhere close to offsetting the new tax cuts going forward.