But there is much more work to do. We must build upon our belief that people can spend their money more wisely than government can. The principle that less produces more when it comes to taxes and revenue.
So today, we say loud and clear to the people of Wisconsin: "It's your money. Keep it."
No more backhanded ways at tax relief – taking too much money from the paychecks of our workers then returning a portion in April through a plethora of confusing tax credits and deductions.
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From now on, we're just not going to take it from you in the first place.
We're going to fundamentally change the way we raise revenue in this state through our tax system. It's going to be simpler, fairer and lower. A system that trusts the people.
Here's how our Trust the People Tax Plan works:
Simpler
We start by making our tax system simpler. The average Wisconsin family should be able to do their own taxes without having to hire an accountant.
Therefore, we're going to take the school property tax rent credit, the dependent credit, the working families credit, the elderly credit and an assortment of miscellaneous deductions and roll them into one new personal tax exemption worth $700 for each taxpayer, spouse and dependent. In other words, a family of four would receive a new and simple $2,800 deduction.
Seniors would receive an additional $250 as part of their exemption for a total of $950.
And the Department of Revenue is going to produce a new state income tax form that makes it easier for people to understand and file their returns.
The result will be a much simpler and less confusing system.
Fairer
Next we make the system more fair.
From Washington, D.C., to Washington state, everyone talks about cutting taxes for the middle class. Unfortunately, no one's ever really done it in a simple, constructive manner.
Until today.
Our tax cuts are going right smack to the middle. Here's how:
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We create a fourth bracket at $150,000 so that we can redirect most of the money for tax cuts to middle- and lower-income families.
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We federalize the standard deduction and raise those eligible for it to $80,150 for couples – pouring money right into the heart of the middle-class.
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Then we increase the standard deduction by nearly $4,000 for couples and $2,000 for individuals, further helping the middle-class.
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And finally, we raise the maximum married couple credit from $385 to $480 to provide greater assistance to our lower-income couples.
These changes will put in place a more fair and progressive tax structure so that all future tax cuts go directly to the people who need them most.
Lower
And then we cut the rates -- for each and every taxpayer in Wisconsin.
We cut tax rates from 6.77 to 6.75 for the new top bracket and 6.50 for the new main bracket.
And the two bottom brackets would drop to 6.15 and 4.60, respectively.
In all, we slice income taxes by $300 million and give the average taxpayer a 5.2 percent tax cut. This plan puts us well beyond our promise to cut taxes 10 percent by 2002.
And it pours a remarkable 95 percent of the money into reducing taxes for families earning less than $75,000.
Finale
What does this all add up to for Wisconsin families? The largest income tax cut directed at the middle-class in our state's history.
As you can see, the tax relief flows right to the middle. The greatest number of filers in Wisconsin fall between $30,000 and $50,000 – and they reap the greatest rewards.
Real relief for real families like the ones joining us today. Please help me welcome three families who put a face on the need to cut taxes.
Marty and Julie Yeager represent the greatest percentage of filers in Wisconsin, those with earnings in the 50s. They will see a $225 tax cut.
And we welcome the John and Fran Rudig family of Wauwatosa and the Mike and Marty Hussey family of Columbus. Each family works hard for earnings in the 40s. They and other families in this income range will reap the biggest benefit -- a $332 tax cut. This represents a 15 percent decrease in their tax liability as a percent of their income.
We promised our families a middle-class tax cut. Today, we deliver. Let's get it passed together.
And we're not done cutting tax rates. While this plan puts us ahead of pace to meet our promise of cutting the main rate to 6.28 by 2002, it remains my goal to push that rate below 6 percent. Doing so means that the first draw on any new revenue generated by economic growth must go back to the taxpayers through deeper cuts.
Let's continue to make sure our taxpayers profit the most from our strong economy.
We seek to spur greater economic growth not just by restructuring our income tax system but our corporate tax system. We must make Wisconsin more competitive with its industrial Midwest peers by moving to combined reporting with sales as the single factor to apportion corporate income taxes.
Our neighboring states already use these systems in some form. And our intention to switch to single factor already is paying dividends by the decision of Rockwell to move its corporate headquarters to Milwaukee. Surely, more companies will follow and that means more jobs.
Let's also spur business development by further whittling personal property taxes. My budget proposes a $12 million property tax exemption for ATMs, cash registers, fax machines and copiers – the basic tools of business and commerce.
Make no mistake about it – Wisconsin is the state where companies are coming to grow and prosper. We've gone from the state that lost Kimberly Clark to Texas to the state that lured Rockwell away from California and Illinois. And it's because of our unwavering commitment to cut taxes and government red tape.
While our tax policies are providing families with good-paying jobs, they're also helping them buy homes and stay in them.
Although property taxes are a local tax, the state can still take steps to further help control and cut them. So let's:
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Add $12 million to the Homestead tax credit.
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Maintain our commitment to funding two-thirds of public schools, cost controls, and assistance to local governments through shared revenue.
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And pass the constitutional amendment on April's ballot that will direct the lottery credit solely to Wisconsin homeowners.
So there you have it – the most fundamental and dramatic restructuring of our tax system in generations. Simpler, Fairer, and most of all, Lower.
This tax reformation etches in stone our state's abiding faith in its people. It invests in our future by trusting the people to build a stronger society in the frontiers of possibility.
Agriculture
For good reason, we have made farmers among the greatest benefactors of our tax cuts through the years. Fortifying the state's economic base for the next century includes strengthening our bread and butter – agriculture.
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Therefore, we should replace an outdated Farmland Preservation program with a new initiative that ties tax relief directly to sound conservation practices.
The old system was largely based on property tax rates. But since we've reduced taxes on farmland, the value of the credit has diminished. Our plan creates a new $35 million Conservation Tax Credit program which provides participating farmers an average tax break of $625.
This plan achieves two very important goals: keeping valuable farmland in production and providing important property tax relief for farmers.
Today, record crops are being harvested, farmland values are up, and our proud dairy farmers experienced record high milk prices last year…while corporate farms in California stumbled.
Quality, it seems, does count for something.
Wisconsin farmers produce the highest quality products in the world and we must make sure they are on every store shelf and dining room table from Stevens Point to San Francisco to Singapore.
Therefore, we should provide the International Agricultural Exports Initiative with $300,000 to market our products abroad, opening new opportunities for our farmers in the global marketplace. Our farmers deserve it.
And I would like to introduce two brothers who exemplify the unparalleled quality of agriculture in Wisconsin. Bob and Fred Uphoff of the Town of Dunn recently received the Governor's Leadership Award for Livestock and Poultry Production as well as the prestigious Steward of the Land Award from the American Farmland Trust. Gentlemen, thank you for setting a high standard of excellence in farming. You make the entire state proud.
The Uphoffs are hog farmers and we all know that industry is going through tough times. Together we recently provided low-interest loans to hog farmers, and my administration plans to help further by serving more pork in its institutions and programs.
And finally, we need to help grow the new and promising sectors of our agriculture economy.
For example, fish farming is a swimming business. We can help spawn new entrepreneurs in this endeavor by developing a $3 million state-of-the-art aquaculture center in Ashland, providing the latest techniques and practical applications of this rapidly growing industry.
New tax credits, enhanced farmland policy and strong investments in the markets of tomorrow will help our farmers plant the seeds for continued growth in the frontiers of possibility.
Higher Education
No matter what economic fields we plow in the next century – the tools to cultivate success are forged in the classroom.
In my State of the State, we spent a great deal of time talking about our K-12 public schools and early childhood development. In this budget, we're raising the bar for our students, teachers and schools and making them accountable to parents and taxpayers.
Our $3 billion increase in local school aids and bold educational reforms reinforce our commitment to public education. Our investments make the K-12 system a rich soil from which fertile imaginations will grow and blossom to one day take root in our technical college and university systems. Two systems we seek to further strengthen.
As much as 80 percent of the fastest growing jobs in the future will require technical training. For our students to compete and succeed in that market, they must have the job skills taught by the Wisconsin Technical College System.
Therefore, I propose creating a $3.3 million Governor's Challenge Grant Program to make a technical education more accessible to our youth. High school students with a B average would be eligible for a $500 grant towards tuition at a WTCS school.
These colleges prepare students for high-demand, high-paying careers. Together, let's give these students a break by making technical college more affordable.
The crown jewel of our education system is the University of Wisconsin System – an incubator of ideas that improve our economy and better the condition of our society. The UW stands as a bright beacon of knowledge that will guide us forward on our journey into the new millennium.
So today, I present to you a $66 million investment in the UW System and our future.
We begin with the University of Wisconsin-Madison, one of the nation's leading education and research institutions.
Its hallowed halls are the birthplace of landmark discoveries, from revolutionizing the dairy industry and discovering vitamin D to mapping living DNA.
The UW-Madison remains one the world's great laboratories of innovation – and the products of its research netted the university $18 million in royalties and licensing fees last year alone.
To keep the University of Wisconsin on the cutting-edge of the nation's public research universities, we should support a new Madison Initiative -- a $30 million investment in the campus and the discoveries of tomorrow.
The Madison Initiative invests directly in facilities renewal, preventive maintenance and library acquisition – upgrading laboratories and computer resources.
Also, the Madison Initiative would attract and keep world-class faculty with competitive salaries, stimulate increased federal and privately supported research, enhance Wisconsin's competitiveness in the global economy, and generate new high-tech businesses from cutting-edge research.
The initiative particularly seeks to build upon the University of Wisconsin's national leadership in biotechnology, providing resources for faculty and courses in biomedical engineering, computer engineering and biotechnology.
In addition, we seek $1 million to create a non-profit venture capital company to invest in biotechnology projects and transfer discoveries to the private sector for the benefit of everyone.
The Madison Initiative is a dramatic investment that matches the boldness of our flagship university, and its benefactors will be the people of Wisconsin.
Our proposed investments in higher education rightfully reach beyond the Madison campus as well, bolstering the strongest system of universities in America. For the entire UW System, this budget invests:
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$12.5 million in library and acquisition capabilities, including expansion of electronic information resources and hiring additional student IT workers.
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$3 million to expand international education opportunities, including a new undergraduate program in global studies at UW-Milwaukee.
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And $2.5 million for undergraduate academic and career advising to help our students focus on their individual goals once they reach a UW campus.
Finally, our budget builds on one of the greatest strengths of the university system – its accessibility.
A UW education remains the best bargain for the buck in America: tuition is the 10th lowest in the Big Ten and accessibility ranks 11th best in the entire nation.
However, we seek to make our universities even more accessible by:
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Spending an additional $700,000 to prepare minority high school students for college – building on efforts to attract more minorities to our campuses.
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Increasing student financial aid by 12 percent over the biennium – an $8.7 million increase -- and providing greater flexibility in setting the Wisconsin Higher Education Grant formula.
