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Wisconsin Taxes in Perspective

Wisconsin Taxes in Perspective. Don Nichols Professor of Economics and Director, The La Follette School of Public Affairs Co-Director, WAGE. January 19, 2005. TRENDS IN WISCONSIN TAXES. Have Our Tax Burdens Been Rising? Tax Burden = Taxes/Income

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Wisconsin Taxes in Perspective

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

  2. 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.)

  3. The next ten slides show the tax burden of Wisconsin’s 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.

  4. Wisconsin’s Tax Burden • The preceding slides show that Wisconsin’s 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.

  5. 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.

  6. Comparisons Across States • The Census data show that Wisconsin’s tax burden has not increased over time. • How do Wisconsin’s 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.)

  7. Summary of State Rankings • Wisconsin’s 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 Wisconsin’s burden.

  8. What Do the Rich States Do? The next three charts show that rich states collect more revenue than poor states. Wisconsin’s revenues do not appear to be unusual relative to its income in these charts.

  9. 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 Wisconsin’s Cost of Living Compare?

  10. 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.

  11. 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

  12. 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.

  13. Summary • There has been no growth in Wisconsin’s 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 Wisconsin’s 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.

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