Over the past 20 years, almost no state has seen a greater drop in its tax burden than Wisconsin, which also saw its ranking among states fall from fourth to the middle of the pack. Depending on how it is measured, the drop in Wisconsin’s state and local taxes as a share of personal income was the largest or nearly the largest nationally since 1999.
New federal data confirm the remarkable decline in Wisconsin’s state and local tax burden over the past two decades, which has exceeded that of almost all other states. The Forum and one of its predecessor organizations – the Wisconsin Taxpayers Alliance – have long tracked this metric, which we define as annual taxes paid to state and local governments here as a percentage of residents’ personal income.
In 1999, state and local governments took in $17.4 billion from taxpayers – about 12.2% of total personal income in the state (the fourth–highest percentage in the country). By 2019, the $30.6 billion in total taxes accounted for just 10.3% of personal income (23rd in the nation). If the state’s tax burden were as large today as it was in 1999, taxpayers in Wisconsin would be paying billions of dollars in higher taxes to fund additional state and local services.
The decline in the state and local tax burden is due in part to growth in the economy and personal income following the Great Recession – where that growth exceeded the increase in actual tax collections the burden fell. In addition, while sales taxes, corporate income taxes, motor vehicle license fees, and other taxes have all shown declines as a share of personal income from 1999 to 2019, the majority of the decline can be attributed to a drop in individual income taxes and property taxes as a share of income.
Since 2011, the state generally has restricted the percentage increase in municipal and county property taxes used for operations to a community’s rate of net new construction, which at the statewide level has been below 1.7% since 2008. The state has also limited revenues for school districts, including property taxes, and made cuts to property taxes for technical colleges and personal property while also repealing the state levy. In addition, the state passed a series of income tax cuts since 1999, including decreases in marginal rates, the elimination of one tax bracket, the exemption of Social Security income from taxation as well as most income from manufacturing and agricultural production, decreases in capital gains taxes, and numerous other changes.