(The Center Square) – Wisconsin has the 35th highest overall tax rate in the country, according to a new report from Wisconsin Policy Forum.
The rate of state and local taxes amounted to 9.9% in 2022, the lowest mark on record, after being 10.3% in 2021.
The national average was 11.1% in fiscal 2022, according to the report.
“Going forward, sizable local property tax referenda and increases in Milwaukee sales taxes may slow or halt the decline in this measure,” the report said. “Yet there is little doubt of the deep impact that this trend has made over the past generation for both bills to taxpayers and spending levels on a variety of public services in the state.”
The report attributed part of the drop to state lawmakers lowering the tax rate for the third income tax bracket from 6.27% to 5.3%.
The cut amounted to roughly $1 billion less in taxes collected. The overall tax burden would have fallen even without the income tax cut, Wisconsin Policy Forum wrote.
“Personal income (a measure including wages, interest, dividends, and government payments to individuals) rose by 8.8% in Wisconsin and 9.2% nationally,” the report said. “The income growth sharply lowered the tax burden in Wisconsin but was not enough to keep taxes
from growing as a share of income nationwide.”
Wisconsin saw the largest drop in tax burden from 2000 to 2022 of any state and went from the highest among its four neighboring states in 2000 to the second-lowest in 2022.
Wisconsin went from the third-highest tax rate as a share of personal income in 2000 to 26th in 2021 to 35th in the most recent compiled data from 2022.
Wisconsin’s rate of taxes per capita also dropped, but at a lower rate, from ranking 24th nationally for state and local taxes per capita at $5,689 in 2021 to ranking 29th at $5,966 in 2022.
Both state and local spending in Wisconsin grew in 2022 but it grew slower than personal income in the state. Spending totaled more than $65 billion, up 7% from 2021.
K-12 education spending rose 4.4% in Wisconsin in 2022 and rose 9.8% nationally.
Wisconsin K-12 school spending totaled 3.8% of personal income in 2022,
down from 3.9% in 2021 and 5.2% in 2000.
Police spending rose 5.8% in Wisconsin in 2022 compared to 3.8% nationally.
“Evers and lawmakers did not agree on large income tax cuts in the 2023-25 state budget,” the report said. “Next, a wave of successful local property tax referenda this year will result in substantial increases on December 2024 tax bills. These increases should also help to counteract at least somewhat the drop in K-12 spending levels as local school leaders try to catch up their budgets after the two recent years of frozen revenue limits.”
