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By Dave Umhoefer July 6, 2011

Full repeal still being considered, but for now smaller changes advanced and approved

Gov. Scott Walker made tax cuts a centerpiece of his successful 2010 campaign.

Once in office, he quickly won passage of various business tax breaks despite facing a massive budget gap.

But his tax promises were expansive.

In one, Walker pledged a repeal of the capital gains tax increase approved by Democrats in 2009 under Gov. Jim Doyle. And he said he would restore the 60 percent exclusion in his first budget.

He made the pledge early and forcefully, but then spoke little of it later amid a "rethinking” of his tax plans. The pledge never came off the table, though, and as the campaign wound down media accounts still listed it as one of his promises.

The 2009 change partially rolled back a tax break on long-term capital gains, cutting the tax exclusion from 60 percent to 30 percent in many cases.

The state"s non-partisan Legislative Fiscal Bureau estimated the change would bring more than $240 million into state coffers over two years.

Instead of seeking a full repeal, Walker won approval for two narrower changes in the capital gains tax that would save certain investors $36 million in two years, but considerably more once they are fully phased in.

Under one, capital-gains taxes are eliminated on long-term investments in Wisconsin businesses beginning in 2011, if the investments are held at least five years.

Under the other, taxes are deferred on all capital gains -- if the proceeds are then invested in a Wisconsin business.

Tax watchers told us Walker's plan was significant, especially in light of the budget challenge, but very modest and targeted compared to the promised full rollback.

Walker spokesman Cullen Werwie said the governor might propose a full rollback of the 2009 changes in the future.

This rates as a Compromise.

Our Sources

Legislative Fiscal Bureau, summary of tax changes 2009-"11, July 8, 2009

Legislative Fiscal Bureau, summary of tax changes2011-"13, June 13, 2011, "Walker says he would cut taxes in first budget,” Nov. 2, 2009

Milwaukee Journal Sentinel, "Walker's proposed capital gains tax break gets lukewarm backing,” March 5, 2011

Milwaukee Journal Sentinel, "Wisconsin candidates for governor say they won't raise taxes,” April 12, 2010

Interview with Jack Norman, research director, Institute for Wisconsin"s Future, July 5, 2011

Email exchange with Todd Berry, president, Wisconsin Taxpayers Alliance, July 5, 2011

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