Sunday, May 22, 2011

"High-taxed" Wisconsin? Not on sales and gas taxes

I always notice when the Sykes-types whine about Wisconsin's taxes, they conveniently leave out that our sales taxes are extremely low compared to other places. Don't believe me? Check your bill at the grocery store the next time you go. Yesterday I grabbed about $35 worth of food, and paid a sales tax rate of just over 1% (I got a couple of multi-packs of soda). If I had to pay 5.5% sales tax on that like other products, that would have been another $1.50 or so that would have come out of my post (income) tax income. Multiply that by several trips to the grocetry store a year, and that's a lot of money staying in my pocket.

And as page 17 of this LFB report shows, there are 14 other states that don't give this tax break to their citizens - almost all red states. That report also mentions that Wisconsin's 5% statewide rate is the lowest in the Midwest, with very low County and local sales taxes (compare to a place like Chicago, with its 4% local sales taxes, or Indianapolis with its 2% prepared food tax, and it makes a big difference).

Another interesting point on that LFB table is the 9 states that impose sales taxes on a gallon of gasoline, including the nearby states of Indiana, Illinois, and Michigan. Wisconsin chooses not to go this route, and instead stays with a flat 32.9 cent-a-gallon tax on the 3.1 to 3.2 billion gallons of gasoline consumed in Wisconsin each year (page 3). Combined with the 18.4-cent Federal gas tax, it means you pay 51.3 cents a gallon in taxes when you go to the pump in the Badger State.

With the recent run-up in gas prices, not having a sales tax on gasoline now means Wisconsin's gas tax rate slips down to 12th in the nation as places like Floriduhhh, Michigan, Illinois and Indiana zip past when the pre-tax amount goes over $3 a gallon, and now is only 1.8 cents a gallon above the national average, with pump prices well below those other states. And unlike several other states, Wisconsin doesn't have the extra user fee of a toll road like many other states. This makes Wisconsin is quite friendly on the tax burdens put onto tourists going through our state compared to our neighbors.

Keep your eye on these sorts of things, because it's Wisconsin's low sales and use tax rates that keeps us in the bottom 10 in states for sales tax burden, and middle of the pack for the all-tax burden. It shows me that if we made the FIBs and other tourists pay more in sales or gas taxes, we could use the savings to cut into our comparitvely-high property taxes, and still maintain the high quality of services that has kept Wisconsin ahead of most states during this economic downturn. So instead of handling the high-(property) tax "problem" by gutting local aids and services and driving down land values further, maybe we could throw the burden onto the tourists and SUV users, and end up a whole lot better off.

But then what would the daytime talk-show whiners have to complain about?

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