New tax report arrives as Wisconsin plans to lower income tax | Wisconsin
(The Center Square) — The latest U.S. tax map could add to the debate over whether Wisconsin should end or reduce its personal income tax.
The Tax Foundation new report examines income tax rates across the country, and Wisconsin is one of the highest taxed states in the Midwest.
The Tax Foundation notes that Wisconsin’s tax rate of 7.65% is the third highest in the Midwest, behind Minnesota and Iowa; and it is the third highest among all Great Lakes states. Only New York and Minnesota are higher on this list.
Among our neighbors, Illinois and Michigan have lower income tax rates than Wisconsin.
“I think a lot of Wisconsin residents would be surprised to learn that Illinois has a flat and much lower tax rate. If Wisconsin wants to attract businesses and residents from high-tax Minnesota and the highly regulated Illinois, policymakers should start by significantly reducing our tax burden,” said Michael Jahr of the Badger Institute at The Center Square.
The report comes as Republicans on Capitol Hill in Wisconsin push to lower and ultimately eliminate Wiscosin’s personal income tax.
Jahr said the Badger Institute worked with the Tax Foundation on a range of tax reform options it would make Wisconsin more competitive.
“A fair and growth-friendly tax structure, combined with Wisconsin’s overall fiscal health, would make Badger State an even more attractive place to do business. Whether it’s flattening, eliminating or better balancing our various taxes, the need for reform is pressing,” Jahr said. “People consider things like taxes when deciding where to live or set up a business. States with no income tax clearly have an advantage, as evidenced by the population and business growth they have experienced in recent years.
There are seven states with no state income tax and 11 others that have flat income taxes. Wisconsin is not on either list.
The Tax Foundation report says income taxes make up a significant portion of state revenue across the country, accounting for about 36% of all funds states receive. In Wisconsin, this number is closer to 50%.