Study Reveals Wisconsin State and Local Tax Burden Is Sixth-Highest in Nation

Published September 1, 2004

As the Wisconsin legislature debated tax limitations amid much confusion and political maneuvering (see “Watered-Down TABOR Bill Rushed to Committee Vote in Wisconsin”), a Washington, DC-based tax analysis group documented why such a law should be enacted in the state.

“The only states where state and local governments take a larger fraction of their citizens’ income are New York, Maine, Ohio, Hawaii, and Rhode Island,” said Tax Foundation economist Scott Moody.

State’s Position Has Improved Slightly

Wisconsin’s taxpayers have gone from being the third most heavily taxed state population in 1999 to the sixth most heavily taxed in 2004, according to the Tax Foundation’s latest estimates of state plus local tax burdens, released on May 6.

“Wisconsin has not ranked lower than sixth since the Carter administration. From 1976 through 1980, Wisconsin ranked seventh, eighth, or ninth, but the state’s ranking has never broken into double digits,” Moody noted.

Wisconsin State Representative Frank Lasee (R-Bellevue) has been fighting for a tax limitation law in Wisconsin for the better part of the past decade. After a watered-down limitation (which he opposed) was passed out of a state Senate committee on July 27, Lasee said, “I’ll continue over the next several months to talk about the issue, and we’ll continue to push it. I’m not giving up.”

State Taxes Have Dropped Slightly

According to the Tax Foundation calculations, taxes paid to state and local government in Wisconsin, as a percentage of all income earned in the state, have dropped over the past five years, from 12.1 percent in 1999 to 11.1 percent in 2004.

That five-year decline in Wisconsin’s state plus local tax burden outpaced the nationwide decline over the same period. The national average state plus local tax bite dropped from 10.4 percent of income in 1999 to 10.0 percent in 2004, according to the Tax Foundation report.

The Tax Foundation has monitored tax policy at the federal, state, and local levels since 1937 and is best known for its annual calculation of Tax Freedom Day.

John Skorburg ([email protected]) is managing editor of Budget & Tax News. Bill Ahern ([email protected])is director of communications at the Tax Foundation.