The Economy & You #56 – Taxes – How Do We Rank?
WTA reviewed the tax figures for 2010 and compared tax burdens as a share of personal income. The results showed that Wisconsin ranked 9th highest of having taxes as a share of personal income. This is up from 14th in 2007. Wisconsin has been known historically as a high tax state. Wisconsin ranks in the top half of the majority of state-local taxes except for sales tax.
According to the data, this is how Wisconsin ranks among the 50 states:
Property Tax – 9th
Individual Income Tax – 12th
Sales Tax – 35th
Corporate Income Tax – 11th
Tobacco Tax – 3rd
Overall Tax Burden – 9th
When compared to other Midwestern states (IA, IL, MI, MN), Wisconsin ranks higher than every state in every category except two. Minnesota ranks higher than Wisconsin regarding individual income tax, and all states except Illinois outrank Wisconsin for General Sales Tax.
Still, this does not tell the whole story. States also receive revenue from charges for services and from the federal government. While the data would indicate that Wisconsin is in the top 10 regarding taxes as a percentage of personal income, if charges are factored into the calculation, Wisconsin’s rank would fall to 14th highest of percentage of tax burden because Wisconsin ranks 31st for charges that state and local governments assess their citizens.
Overall, state tax rankings have not changed much over the last few years. Alaska, New York, North Dakota, Vermont, and Wyoming have remained the five highest tax states in the country while Alabama, South Dakota and Tennessee have stayed near the bottom.
Another source of revenue for states is aid received from the federal government. Historically, Wisconsin does not fare well in receiving federal dollars and Wisconsin continues to be ranked in the bottom half of states that receive funds from Washington D.C. Still, Wisconsin did see an increase in federal aid from 2008 to 2010. Revenues increased over 46% in that period which is a large increase when one considers that federal aid was less than 3.6% of state revenue in 2008 and that percentage reached 5.2% in 2010.
We must remember that revenues are only one side of the budget equation. While Wisconsin ranks high for tax burden as a share of personal income, we also need to examine the spending side and what state-local spending takes as a percentage of personal income as well — an article for a future date.