In Fiscal Year (FY) 2016, Wisconsin collected $27.4 billion in state and local taxes—or $4,750 for every man, woman, and child. While this is an impressive sum of money, it tells us little about whether or not the average Wisconsin taxpayer can afford this level of taxation?
To better answer this question, this analysis will calculate Wisconsin’s tax burden relative to the private sector. Ultimately, it is the private sector that creates new wealth and income. A high tax burden means a state is hobbling its private sector relative to other states and reducing their long-run economic growth potential.
As shown in Chart 1, Wisconsin’s state and local tax burden (tax collections divided by private sector personal income) was the twenty-third highest in the nation for FY 2016 at 14.3 percent—or -1 percent below the national average of 14.2 percent.
#Wisconsin state and local #taxburden in FY 2016 was the 23rd highest in the nation at 14.2%— -1% below US average of 14.3% http://bit.ly/2FX9C8F @keypolicydata #WIpolitics #WIleg #WIsen #WIgov #PolicyData (click to tweet)
As shown in Chart 2, Wisconsin’s tax burden has increased over time by 59 percent to 14.2 percent in FY 2016 from 8.9 percent in FY 1950.
As shown in Chart 3, Wisconsin’s 14.4 percent tax burden is greater than these combined industries: retail trade (6.1 percent), construction (5.9 percent), and educational services (1.4 percent).
Wisconsin’s lower than average state and local tax burden is driven by lower taxes such as the sales tax burden (2.8 percent, 16th lowest) and all other taxes burden (1.7 percent, 15th lowest) which are partially offset by higher taxes such as the individual income tax burden (3.9 percent, 15th highest), corporate income tax burden (0.5 percent, 17th highest), and property tax burden (4.8 percent, 17th highest).
Of course, the tax burdens for local government can vary just as much as they do among the 50 states. As such, we have also calculated the local government tax burden for every county in Wisconsin—this includes every taxing jurisdiction within the geographic county borders whether it is a city, a special district, or county government itself.
The 20 Wisconsin counties with the highest local government tax burden include:
The 20 Wisconsin counties with the lowest local government tax burden include:
Note: Tribal governments are classified as local governments in the government data used in this analysis. As a result, counties with significant tribal employment, such as tribal-owned casinos, will have very small, and in some cases negative, private sectors (such is the case for Menominee County). This result is compounded in low population counties.
Finally, don’t forget to watch our exclusive time-lapse video of state and local tax burdens over the last 66 years! See if your state has been above or below the national average?
Scott has nearly 20 years of experience as a public policy economist. He is the author, co-author and editor of over 180 studies and books. His professional experience also includes positions at the American Conservative Union Foundation, Granite Institute, Federalism In Action, Maine Heritage Policy Center, Tax Foundation, and Heritage Foundation.