More details on proposed tax cut

AP Modified

Updated: Jan 23, 2013 10:56 AM

GREEN BAY — We're learning more about the proposed tax rate cut the governor first mentioned last week.

But will it be enough to make consumers spend more to boost the economy?

Governor Scott Walker says the income tax cut he's proposing could be around $342 million.

That's how much the state is projected to have in a budget surplus.

"The need is now," Gov. Walker explained. "Part of what we're looking at is to try to figure out, you know, could you put a couple hundred dollars in the hands of citizens across the state, but these are things we're trying to work out."

Walker says the tax cut would come out to about $200 in savings per family. However, how it's still unclear how that would be applied.

State Democrats say they're behind the idea as long as the focus stays on helping the middle class.

In a statement, Assembly Democratic Leader Peter Barca wrote, "The number one priority for Democrats in the upcoming budget is a focus on middle class families. During the last Republican budget, middle class families, and those struggling to get into the middle class, bore the brunt of the sacrificing and cuts. Democrats strongly support tax cuts that benefit the middle class. It's important that middle class taxpayers be able to keep more of their hard-earned money. A strong middle class leads to more consumer spending and a healthier economy."

"When taxes are lowered, it immediately puts some money back into the hands of consumers and the consumer's typical reaction is to go and spend that money," explained Chad Nehring, a financial planner with Conceptual Financial Planning Inc.

Nehring agrees some financial relief could help the economy. However, he says with higher taxes at the federal level, it's not going to fix everything.

"With the payroll tax holiday expiring, the average tax rate increase on families is going to be anywhere from $1,000 to $1,500, so it's very unlikely that it's going to even out," Nehring said.

Nevertheless Nehring says every little bit helps.

It's unknown when taxpayers would see lower rate if it's approved.

The governor's office told FOX 11 Tuesday afternoon details of the governor's ideas will be released next month in his budget.

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