Wisconsin is facing a pivotal moment with a budget surplus of roughly $4.6 billion—the largest in state history. This surplus has become the focal point of contentious debates between the Republican-controlled legislature and Democratic Governor Tony Evers. At the heart of the disagreement is whether the surplus should be returned to taxpayers or used to expand government programs.
Republicans have championed tax cuts as the key to reducing Wisconsin’s overall tax burden and bolstering the state’s economic appeal. They argue that returning the surplus to taxpayers not only respects the hard work of Wisconsin residents but also continues a trend of fiscal responsibility that has seen the state’s tax burden fall significantly. Since 2000, Wisconsin has reduced its tax burden from 12.47%—the third-highest in the nation—to a historic low of 9.9% in 2022. This dramatic drop, the largest of any state during this period, has made Wisconsin more competitive and less reliant on government spending.
In contrast, Democrats have suggested using the surplus to expand programs and increase spending that they believe will benefit the public. However, critics note that they have yet to present concrete plans to address pressing issues like the rising cost of living. Governor Evers’ decision last session to veto three of the four Republican-proposed tax cuts has added fuel to the fire, with GOP leaders urging him to reconsider given the even larger surplus.
The Wisconsin Policy Forum recently highlighted the state’s progress, noting that Wisconsin’s tax burden is now well below the national average. In 2000, Wisconsin ranked among the highest-taxed states, but it now sits at 35th. Much of this progress has been attributed to targeted income tax cuts, such as the $1 billion reduction for the third income bracket in 2022, which lowered the burden while inflation caused increases in other states.
Republicans argue that continuing to lower taxes will make Wisconsin a more attractive place to live and do business.
As a split government requires bipartisan cooperation, both parties must navigate these debates carefully. Whether Wisconsin chooses to expand programs or reduce taxes further, the decisions made will shape the state’s fiscal and economic future for years to come.
