Wisconsin Taxes in Perspective

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Wisconsin Taxes inPerspective

• Don Nichols
• Professor of Economics and
• Director, The La Follette School of Public
  Affairs
  
• Co-Director, WAGE.
• January 19, 2005

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TRENDS IN WISCONSIN TAXES

• Have Our Tax Burdens Been Rising?
• Tax Burden Taxes/Income
• Taxes State AND Local Taxes
  U.S. Census data FY 2001-02
  
• Income Personal Income (BEA def.)

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• The next ten slides show the tax burden of
  Wisconsins major taxes. The 92-2000 slides are
  data from the U. S. Census web page.
  
• The FY96 to FY 04 slides are Wisconsin Taxpayer
  Alliance data.
  
• These data differ in very minor ways.

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Wisconsins Tax Burden

• The preceding slides show that Wisconsins total
  tax burden has been roughly constant for the past
  15 years.
  
• The charts show the large cut in the Personal
  Income Tax in 01 and the reduction in Property
  Taxes in 96-97 which is when the state increased
  its share of school spending to two thirds.

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All Own Source Revenue

• The next chart shows Own Source Revenue.
• Own Source Revenue is the total amount of money
  paid by Wisconsinites for state and local
  government services.
  
• It does not include Federal Funds.
• It does include all taxes and fees, including
  licenses and tuition.
  

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Comparisons Across States

• The Census data show that Wisconsins tax burden
  has not increased over time.
  
• How do Wisconsins Tax Burdens Compare to Tax
  Burdens in Other States?
  
• In the following charts, Wisconsin is the state
  with the dark vertical bar. The charts are based
  on Census data for all state and local taxes.
  (FY2001-02.)

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Summary of State Rankings

• Wisconsins total tax burden is the sixth highest
  of all states.
  
• It has the 15th highest burden when all taxes and
  fees are compared. The burden is roughly 16 cents
  on the dollar.
  
• The majority of the states have tax and fee
  burdens within a penny or two of Wisconsins
  burden.
  

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What Do the Rich States Do?

• The next three charts show that rich states
  collect more revenue than poor states.
  
• Wisconsins revenues do not appear to be unusual
  relative to its income in these charts.

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The Cost of Living

• Taxes Are Part of the Cost of Living, which can
  affect decisions over where to live.
  
• How Much Do Costs of Living Vary by State?
• How Does Wisconsins Cost of Living Compare?

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ACCRA Cost of Living Data

• In the following chart, a level of 100 represents
  an average cost of living.
  
• 110 would be cost of living 10 above average.
• 90 would be a cost of living 10 below average.

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Costs of Living Vary by a LOT

• Taxes Vary by a few pennies on the dollar.
• Costs of Living Vary by a few dimes.
• Housing Cost Differentials Dominate Cost of
  Living Variations
  

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My Last Point Deductibility

• Income and Property Taxes Are Deductible from
  Federal taxes.
  
• Sales Taxes, Other Taxes and Fees Are Not.
• The Taxes that are High in Wisconsin are the Ones
  that Are Deductible.
  
• A Properly Constructed Measure of Tax Burdens
  Would Calculate Deductibility.

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Summary

• There has been no growth in Wisconsins tax
  burden in recent years. Our taxes take the same
  share of our income today that they took a decade
  and a half ago.
• The burden of Wisconsins taxes and fees is the
  15th highest of the states.
  
• While the local cost of living matters for
  decisions on where to live, local living costs
  vary by a lot more than local tax costs.