Republican lawmaker proposes sweeping overhaul of WI tax code

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MADISON (WITI) -- Republican lawmakers are proposing a sweeping overhaul of the Wisconsin tax code, and hundreds of millions in new tax cuts. The plan is sparking new debate over state priorities, and Democrats are saying it'll just make the rich even richer. It's all happening with about a week to go before the Legislature's budget committee finishes writing the state spending plan for the next two years.

State Rep. Dale Kooyenga (R - Brookfield) says $700 million in newly found money should go to tax cuts for Wisconsin workers and wholesale reform of the Wisconsin tax code.

"We just got tremendous news -- that the state of Wisconsin has over $500 million in excess revenues because of economic growth, so that's a game changer," Kooyenga said.

That, along with about $180 million originally intended for the UW System now going back to state coffers means Wisconsin has extra money, and Kooyenga says taxpayers should benefit.

Kooyenga has unveiled a plan that would overhaul the state's tax code, eliminating 20 tax credits for special interests that would save about $5 million, and simplifying the tax code from five income brackets to three.

"(This plan) would basically produce one tax bracket for people making $14,000 to people making $419,000, so the person who's very well off has the same tax bracket as someone who is a cashier," Rep. Jon Richards (D - Milwaukee) said.

Gov. Walker has already proposed a plan to cut income taxes by $343 million in this budget.

"I said my priority, after the revenue numbers came out, that my priority was more for public education and more for the taxpayers," Gov. Scott Walker said.

Kooyenga's plan adds another $450 million onto that.

The state's top earners would benefit the most, something Kooyenga acknowledged.

"When over 50% of the tax revenue comes from the top 10% of wage earners, it is nearly impossible to create a tax cut that is not going to disproportionately lower taxes for upper middle class and rich taxpayers," Kooyenga said.

"The plan benefits the rich, not the middle class. It goes farther than Gov. Walker's tax plan," Rep. Richards said.

Rep. Richards blasted the plan, saying Republican priorities were misguided. He says the lion's share of the surplus should be returned to education, after historic cuts in 2011.

"The largest cut in the history of our state in the last budget and the dollar amount of that cut almost equals what's going to be spent on tax cuts in this budget, so I think it's clear where the money's coming from. It's coming from our schools," Rep. Richards said.

This plan is expected to be debated in an executive session of the Joint Finance Committee this week.