AIO My MIL slapped my 19 month old son (hard) and when I told my wife she accused me of lying

The other day my 19-month old son slapped my MIL so my MIL hauled off and smacked him. She didnt wind up, but you could see she was pissed when she did it and she definitely didnt holdback. I immediately & loudly said "momma!", grabbed my son, and walked away. I told my wife and she accused me of exaggerating and then later of lying.

For a little extra background my in-laws live with me and we have had issues with boundaries since the beginning. My wife and I will set a rule and then her parents will break it. They talk trash about my parents to my kids. My MIL exaggerates things I've said to try and make me look bad (I once complimented my wife on how quickly she recovered after giving birth, literally saying she had "good genes". My MIL, who has type 1 diabetes tried telling my wife that I said "Im so glad she doesn't have the bad genes"), I've tried talking to my wife about their behavior and she either claims ignorance or takes their side (w the exception of the good genes comment, because she was standing there when I said it). I have told me wife that they have to move out and she is somehow pissed at me.