Rebecca Kleefisch nods at moving Wisconsin to a flat income tax as she pursues run for governor

MADISON – Republican candidate for governor Rebecca Kleefisch is inching toward backing a flat income tax, calling Wisconsin’s century-old tax system a foolish mistake.

The Republican former lieutenant governor made the comments this week as she called for ending taxes on retirement income and made the case for "transformational income tax reform."

She did not explicitly endorse a flat income tax but she came close to doing so by disparaging the state’s progressive income tax, which requires residents to pay higher tax rates as their income goes up.

Wisconsin was the first state to impose a workable income tax in 1911. The federal government adopted its current income tax system two years later.

"Wisconsin literally gave America the progressive income tax — whoops," Kleefisch said Monday in an interview on WSAU-AM. "I say that it happened in 1911 and that’s how it happened because women didn’t have the right to vote yet. Women would never have allowed such foolish policy.

"We have the opportunity right now to fix a generational wrong that Wisconsin gave to the world, so let’s just fix it. Let's do transformational income tax reform."

Thirty-two states have progressive income taxes, according to the Tax Foundation. Eleven states have flat incomes taxes and seven have no income taxes.

The other Republicans running for governor — management consultant Kevin Nicholson and state Rep. Timothy Ramthun — have not offered detailed tax plans, though Ramthun has said he’d consider a flat tax. The three will face each other in an Aug. 9 primary.

Gov. Tony Evers has backed progressive income taxes, as have his fellow Democrats who argue those who make more should pay a larger share of their income to the state.

As governor, Evers has signed two rounds of Republican-authored income tax cuts. He has touted the tax cuts after pledging during his 2018 run to cut income taxes for the middle class by at least 10%. 

"Gov. Evers believes Wisconsinites should get to keep more of their hard earned money. That’s why he followed through on his campaign promise to cut taxes by signing a bipartisan, 15% income tax cut for working families," Evers campaign spokeswoman Kayla Anderson said in a statement.

Kleefisch and other Republicans have questioned Evers' commitment to lowering taxes because he called for raising the gas tax in 2019 and twice proposed raising taxes on large agricultural and manufacturing operations.

In her interview on WSAU, Kleefisch didn’t say how much she wanted to cut income taxes but said they should be lower than Wisconsin’s neighbors.

“Let’s drop rates to the lowest they have been in our entire adult lifetime and let’s actually compete,” she said. “Let’s beat our competitors in the Midwest.”

Wisconsin’s income tax rates start at 3.54% and rise to 7.65%. Republicans who control the state Legislature over the past decade have focused their income tax rates on the middle brackets but largely left in place the top rate, which is levied on individuals for income of $267,000 and up.

Minnesota’s income tax rates start at 5.35% and go up to 9.85%. Illinois has a flat income tax rate of 4.95% and Michigan has a flat income tax rate of 4.25%.

Iowa’s income tax rates start at 0.33% and rise to 8.53%. Republican Gov. Kim Reynolds recently signed a law that will give the state a flat tax of 3.9% in 2026.

Kleefisch this week said she wants to eliminate taxes on retirement income, which she said would entice more people to remain in Wisconsin. She didn’t provide details on the cost of that part of her plan.

Grover Norquist, the president of Americans for Tax Reform, endorsed Kleefisch this week, praising her for her support for cutting taxes when she served alongside Gov. Scott Walker.

Ramthun in an interview this week said he was open to establishing a flat tax or eliminating the income tax but wanted to study the ideas. Proposals to eliminate the income tax have generally been paired with raising the state’s 5% sales tax.

“Everything's on the table for me,” Ramthun said.

He said he thought eliminating taxes on retirement income was worth considering but contended Kleefisch has not fully vetted the proposal.

“It looks like she's pandering for votes for the retirement-age people,” he said.

Nicholson spokeswoman Courtney Mullen said Nicholson would focus on finding ways to cut spending and then work with lawmakers to decide how to cut income and property taxes. 

That's in line with what he said in an interview in February. 

"I just know that you have to structurally reduce your spend first, and then we can talk about how we do this going forward,” Nicholson said then.

Contact Patrick Marley at patrick.marley@jrn.com. Follow him on Twitter at @patrickdmarley.