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WISCONSIN — State and local tax burdens will drop to record lows in 2022, according to a new report from the Wisconsin State Policy Forum.
Researchers attribute the decline to a $1 billion income tax cut, tighter property tax limits, and soaring resident income.
Tax burden is the total amount of taxes collected in Wisconsin measured against statewide personal income. This is the metric that Forum and the Wisconsin Taxpayers Alliance have tracked him for over 50 years.
Tax collections increased 4.1% from FY21 to $35.36 billion in FY22. However, the tax burden decreased as personal income growth was higher than the total tax amount.
While Wisconsin’s tax burden is steadily declining, the local tax burden is now lower than half a century’s worth of data, according to the report. The data also show that state and federal burdens on families and businesses are also near historic lows.
According to the 2020 Census Bureau, the Forum also noted in its recent overview that state and local tax burdens have been below the national average for three years.
Ten years ago, state and local taxes on personal income were 11.4%. Now that percentage is just under 10.1% for him. This is the lowest level since 1970, according to forum records.
As mentioned earlier, one of the reasons for the lower tax burden was the tax cuts that Gov. Tony Evers implemented in the 2021-23 budget. This reduced the tax rate for the third income tax bracket from 6.27% to 5.3%, and reduced personal income tax revenue by 0.7%. The decline was the largest annual decline in that bracket since the late 1980s.
Overall, local tax collection increased by 2% in 2021. The trend is due to efforts by state officials to curb property taxes, which account for nearly all local taxes in Wisconsin, according to the report. This is the largest single tax in the state.
Tax collections also rose in certain other areas.
State sales tax collections increased 9.5% from fiscal 2021 to fiscal 2022. This was the largest year-over-year increase since the early 1980s. According to the forum’s report, inflation and an increase in the consumption tax rate by Congress are the reasons for this increase. Inflation has caused consumers to spend more on goods and services, increasing total sales tax collection.
Gasoline tax collection rate also increased to 15.8%. This has historically been a long-term decline area, but as the pandemic eases, more people are traveling again.
According to the report, these findings show that “Wisconsin officials have made local tax collections much tougher than their own in recent years.”
State tax revenues have increased by 56.9% since 2010, despite Evers implementing significant income tax cuts. Local tax revenues have only increased by 23.7% over the same period.
The researchers say this “discrepancy” is notable, even as the state gives a portion of state-raised revenues to communities for services like schools and Medicaid.
Recently, voters have also proposed the idea of raising their own property taxes to increase the resources of school districts and local governments, but the forum says the trend exacerbates community differences for the means. I said yes.
In a typical budget year, state officials must choose between meeting funding needs at the local level and retraining for tax increases, researchers say. But a projected record state budget surplus could help achieve both in the upcoming budget, which begins July 1.
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