Wisconsin taxpayers are experiencing the lowest state and local tax burden in at least half a century as incomes rise and state taxes remain stagnant.
An analysis by the nonpartisan Wisconsin Policy Forum shows state and local taxes make up 10.5 percent of personal income, the lowest since they began compiling figures in 1970. The lower tax burden is reflective of not just rising incomes, but low unemployment, and limits and cuts to local property taxes, the Policy Forum notes.
The lower tax burden comes as lawmakers in the upcoming budget season would need to come up with an additional $2 billion to cover the cost of existing commitments in state law, according to the analysis.
Since Wisconsin is entering a period of split government, the Forum notes taxpayers could see little to no change in state tax policy.
The tax burden as a percentage of personal income has ticked down from 11.7 percent in 2010 and 12.6 percent in 1990.
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Federal taxes, which comprise the majority of the tax burden for most Wisconsinites, have also decreased in recent years, partially due to the 2017 Tax Cuts and Jobs Act. About 18.9 percent of Wisconsin personal income goes toward federal taxes.
The Policy Forum notes that the total federal, state and local tax burden is near the lowest in a generation.
While some state taxes, such as corporate income, cigarette, hospital assessment, have declined, the rise in state residents' personal incomes is the chief factor contributing to the lower percentage tax burden.
Personal income has risen since 2010 and experienced a 3.6 percent increase in 2017, which partially explains why state and local tax revenues have actually increased in the last few years. State and local collections grew by 2.3 percent in fiscal year 2018 while federal collections in the state increased by 0.7 percent.
State taxes and fees accounted for $19.3 billion in revenue in 2018. By far the largest source of revenue is the state income tax, which brought in $8.5 billion in revenue in 2018; and the state sales tax, which amounted to $5.4 billion.