MADISON — Despite billions of dollars in tax relief, Wisconsin’s state tax burden in 2021 rose for the first time in a decade, according to a new report by the Wisconsin Policy Forum.
But overall tax burden declined last year as local and federal taxes as a share of income dropped to historically low levels, the report finds. The federal relief has much to do with the tax cuts of 2017, passed by Republicans and signed into law by President Trump.
“After a decade in which legislators in the state Capitol have put considerable focus on lowering taxes and the 2017 adoption of a major tax overhaul at the federal level, the combined local, state, and federal tax burden has never been lower for Wisconsin residents since at least 1970, when we began tracking this information,” the report finds.
A Policy Forum report late last year found Wisconsin’s individual tax burden had declined more than just about every other state over the past 20 years. Republicans, in control of the state Legislature for more than a decade, have passed billions of dollars in tax cuts — $2 billion alone in income tax relief in the current two-year budget.
Wisconsin taxpayers would have paid $5.57 billion more in taxes to state and local governments had the state’s tax burden as a share of income been the same in 2019 as it was in 1999, according to the Policy Forum.
The latest report finds a surge in economic activity as the state emerged from “the worst of the pandemic” (state and local lockdowns, in particular) resulted in a 9.2 percent increase in state tax collections. This despite generally steady tax rates. Such robust tax collections had not been recorded since 1984, according to the Policy Forum, successor of tax tracker Wisconsin Taxpayers Alliance.
State taxes climbed to 7 percent of personal income in 2021, up from 6.7 percent the year before, the report states. That’s because personal income (up 5.2 percent) did not keep pace with tax obligations.
Meanwhile, local and federal tax burdens declined. As a share of income, property and other local taxes fell in 2021 to 3.5 percent, down from 3.6 percent the previous year to the lowest level since at least 1970, according to the report.
“The drop in the total burden does not mean that tax liabilities have dropped for all Wisconsin residents equally or that certain taxes do not remain relatively high for lower and middle-class families,” the Policy Forum notes.
State Sen. Dale Kooyenga (R-Brookfield), a tax bracket-cutting crusader, said there’s much work left to be done. He said there definitely is a road to making Wisconsin one of a handful of states to eliminate the income tax.
“We need to put that road in statute so that if we don’t have a Republican governor, or if we have a Republican governor who is not as conservative as we would like, he’s still held accountable to the schedule of going toward a flat tax and then no income tax,” Kooyenga said.