New Fed Figures for 2010 Show Wisconsin Taxes 9th Highest Nationally
Taxes as Percent of Income Rise to 11.7%, Rank Unchanged
U.S. Census figures released Wednesday show that state-local taxes in Wisconsin claimed 11.7% of personal income in fiscal 2010 (2009-10), ninth highest among the states, the Wisconsin Taxpayers Alliance (WISTAX) reported today. During the prior year, Wisconsin taxes claimed 11.2% of income, and were also ninth highest. WISTAX is a nonpartisan, nonprofit policy research organization dedicated to citizen education.
Nationally, taxes relative to income also rose from 10.2% to 10.7%. In fact, during this late-recession period, the tax burden rose in 44 of the 50 states. Georgia, Louisiana, Montana, New Mexico, Utah, and Wyoming were the exceptions.
Wisconsin’s increased tax burden was due to a combination of falling personal income and higher taxes. Statewide personal income was down 3.0% in calendar 2009 (used to calculate the 2009-10 tax burden), while state-local tax collections rose 1.1% to $24.4 billion. According to Census figures, taxes on corporate income (+29.6%), tobacco products (+18.6%), utilities (+13.1%), and property (+4.5%) rose the most. The large increases reflect tax increases on business and tobacco enacted in 2009. Individual income tax (-3.0%) and general sales tax (-3.6%) collections were both down.
Wisconsin’s tax burden (11.7% of income) was 9% above the U.S. average (10.7%). Most of the difference was due to individual income and property taxes. Both were more than 20% above the national average in 2010; the property tax ranked 10th and the income tax, 13th.
“Wisconsin relies less on sales taxes and federal aid than other states,” WISTAX President Todd A. Berry explained. “The result is higher individual income and property taxes here.” Sales taxes ranked 35th (about 16% below the U.S. average). Wisconsin’s corporate income tax ranked 12th (12.7% above), reflecting both a tax increase and economic volatility.
Another way to compare state-local revenues is to add to taxes various user fees and charges, such as those for higher education, public hospitals, and local sewers. In 2010, Wisconsin taxes and fees combined claimed 15.0% of personal income (14th highest nationally) vs. 14.4% (11th highest) during the prior year. While some cite this figure as the state’s “tax rank,” it is more accurate to call it taxes-plus-fees. WISTAX notes that, while fees are discretionary, taxes are mandatory.
Rather than use income, some tax researchers compare state taxes based on population. Per capita, state-local taxes here ranked 15th, while taxes and fees combined ranked 19th. Because Wisconsin’s personal income per capita is below average, its revenue rankings are higher relative to income than relative to population.
In addition to revenues, the U.S. Census also compares state-local spending. In 2010, direct general expenditures here claimed 22.0% of personal income, 23rd highest nationally. In 2009, these expenditures accounted for 20.9% of income and ranked 21st. WISTAX will provide more detail on the new Census information in forthcoming issues of its biweekly Focus newsletter.
[Note: The Census Bureau defines taxes to include several fees, e.g., vehicle registration, drivers’ licenses, and several sportsmen’s fees.]
Corresponding data tables with additional information can be found at: http://wistax.org/facts/2010-state-local-tax-burden