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Wisconsin's tax burden, by share of income, hits lowest point in half century
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STATE AND LOCAL TAXES

Wisconsin's tax burden, by share of income, hits lowest point in half century

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The share of income Wisconsinites dish out each year to pay state and local taxes has reached the lowest level in at least a half-century, driven in large part by growth in personal incomes.

A new report from the nonpartisan Wisconsin Policy Forum shows Wisconsinites in 2019 paid 10.3% of income in state and local taxes, down from 10.4% in 2018.

The 2019 numbers represent the eighth consecutive year in which Wisconsinites devoted a smaller percentage of their income to state and local taxes than in the year before. The tax burden has decreased each year since 2011, when former Republican Gov. Scott Walker took office. Gov. Tony Evers, a Democrat, replaced him in January 2019, although Republicans continue to dominate the Legislature.

Wisconsin’s tax burden has largely decreased since the mid-1990s and has reached its lowest point in Policy Forum records since 1970. For example, Wisconsinites in 2019 saw their tax burden, as a percentage of their income, drop by about 22% from 1994, when 13.2% of their income went for state and local taxes.

Last year’s lower tax burden was largely driven by increases in Wisconsinites’ personal income. Wisconsin’s tax burden decreased despite the state and localities collecting 4.5% more in tax revenue in 2019, the biggest percentage increase since 2011. The increase in revenue came even as Republicans and Evers agreed to an income tax cut providing the average taxpayer a roughly $75 cut in 2019.

Total personal income — wages, salaries, investment income and government benefits — increased by 5.1% to nearly $300 billion in 2018, the most recent year for which data are available. The Policy Forum report states the increase in personal wealth made it easier for the state’s residents to pay their taxes.

In 2019, state tax collections increased by 6%, driven in part by corporate income tax revenues, which increased by 50% due to changes in federal tax law. Local tax collections grew at a smaller rate of 1.8% last year due in large part to efforts to keep property taxes, which account for the vast majority of local tax revenue, low.

Local taxes represented a 3.5% share of personal income in 2019, the lowest rate since at least 1970. Such rates, however, may not last much longer. A Policy Forum report in December estimated 2020 property taxes levied by Wisconsin school districts have increased by the highest rate in a decade, driven by changes in the state budget and school district referendums.

School districts across the state have levied $5.21 billion in property taxes in bills sent out this month, a 4.5% increase over the $4.99 billion they levied last year.

According to the report, Wisconsin’s tax burden is unlikely to see any significant changes in the near future because Wisconsin government is split between the two major parties, making it harder to pass major legislation.

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