Wisconsin sales tax holiday bill appears dead and entire tax cut bill at risk of impasse

MADISON - A Wisconsin sales tax holiday appears all but dead in the state Senate and an impasse between GOP lawmakers is putting the entire tax cut bill at risk.

Senate Majority Leader Scott Fitzgerald (R-Juneau) said GOP senators wouldn't even hold a hearing on a one-time sales tax holiday that passed the Assembly last week. Also Monday, Fitzgerald signaled that he likely had the votes in the Senate to shut down the state's troubled youth prison.

In an interview Monday, Fitzgerald called the $52 million sales tax holiday passed by Assembly Republicans a "gimmick" that would simply shift the timing of consumer purchases without actually boosting economic activity in the state.

"There's just not the votes for it," Fitzgerald said of the tax holiday. "I wouldn't vote for it."

Instead, the Senate Committee on Economic Development will consider a bill written by Fitzgerald that would drop the sales tax holiday but still include the $100 per child tax rebate proposed by Gov. Scott Walker last month. The GOP Senate leader said he believed he could pass that proposal, Senate Bill 798, when his house meets March 20.

GOP Gov. Scott Walker has pushed hard for that child tax rebate, making it the centerpiece of his re-election agenda as he heads into a difficult fall campaign. But Fitzgerald's move raises at least some doubt as well about the one-time rebate, which would work out to $122 million for parents.

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That's because Assembly Speaker Robin Vos (R-Rochester) said his house adjourned on Friday for the final time this year and wouldn't return to consider any bills passed by the Senate. Vos said the Senate's options on the tax cut proposal were to "take it or leave it" as is.

If the Senate passes the Assembly version of the bill with the sales tax holiday included, it would go immediately to Walker and be signed into law.

But if GOP senators pass their own tax bill without the sales tax holiday, then Vos and Assembly Republicans would have two choices: to let the entire tax cut die or eat their words and come back to vote on it.

A spokeswoman for Vos didn't back down Monday.

"Assembly Republicans support the deal that was negotiated with the governor where every Wisconsin family would share in the reform dividend," Kit Beyer said.

Walker spokeswoman Amy Hasenberg said the governor would keep working with both houses to keep the tax cut bill on track and provide savings to "taxpayers who overpaid so they can spend it on their priorities."

Senate Minority Leader Jennifer Shilling (D-La Crosse) said GOP lawmakers should consider putting the money into highways and bridges or a tax credit for child care.

“The Republican dysfunction that paralyzed leaders during the budget last summer is flaring up once again. It’s frustrating that Republican leaders continue to argue over who has the most power rather than working on the issues that matter to Wisconsin residents," Shilling said in a statement.

Under the Assembly bill, the sales tax holiday would fall on Aug. 4-5 and would essentially waive the state's 5% sales tax and applicable 0.5% local sales taxes for that weekend on an unlimited array of qualifying items priced at less than $100.

These sales tax holidays have proved relatively popular in a number of other states. But they are generally panned by economists, who argue that consumers end up buying the same amount of goods but doing so a bit earlier or later than they otherwise would have.

The child tax credit would go to any family with a child younger than 18 as of Dec. 31, 2017. About 671,000 families with 1.22 million children are expected to meet the definition.

The child tax credit would be paid out in a sales tax rebate check that would be separate from the state's regular potential income tax refund checks.

Also Monday, Fitzgerald said he thought the Senate could unanimously pass a proposal to shut down the state's only youth prison, Lincoln Hills School for Boys, by 2021. Previously, Fitzgerald said such a vote could be a "heavy lift" for his house.

But the GOP leader declined to weigh in on what facilities should replace Lincoln Hills. The Assembly passed a bill last week to replace Lincoln Hills with a several smaller regional facilities run by the state or counties.