Wisconsin's lower tax burden only applies to business, not people

#Wisconsin’s tax burden has fallen again. It's now at its lowest level in nearly 50 years according to @WisPolicyForum. #WIForward https://t.co/7qCLDQWQsS

— Speaker Robin Vos (@SpeakerVos) December 19, 2018

And several other WisGOP legislators along with Governor Walker followed up with similar statements. But let's take a look at that Wisconsin Policy Forum paper on Wisconsin's tax burden, and see what it really tells us.

First of all, here is the part of the report that is the basis of Vos and the other WisGOPs' statements.

STATE-LOCAL TAXES The state-local tax burden relative to personal income has fallen steadily for many years. In 2011, the combined state-local burden was 11.7%; in 2018 it was 10.5%. The decline has been driven by restrained growth in local tax collections and, more importantly, by rising personal income. The local tax burden dropped from a high of 4.4% in 2011 to 3.7% in 2018, while the state’s share fell from 7.3% to 6.8% over the same period. Personal income growth far outpaced tax collections during those years. Looking at nominal dollars, total state-local tax collections increased 13.9% from 2011 to 2018 while personal income increased 27.8%.

Of course, the increase in personal income didn’t only happen in Wisconsin over that time period, as personal income in the United States rose by 31.6% from June 2011 to June 2018 (take a look here if you don’t believe me). I don’t see a “Thanks Obama” coming out from WisGOP on that one.

But the state and local tax numbers certainly reflect on Walker/WisGOP policies, and given that rising incomes should push people into higher tax brackets, you’d think that would cause the tax burden to rise a bit, although that would be counteracted by the fact that higher incomes pay a lower percentage of their incomes in state-local taxes in Wisconsin. And that didn't occur.

So what’s happening here? Let’s start at the state level, and remind ourselves what types of taxes we are talking about.

State taxes and fees totaled $19.3 billion in 2018, up 2.5% from last year. The major state taxes are individual and corporate income taxes; the sales tax; the unemployment insurance payroll tax; the gas tax; the hospital assessment tax; “sin” taxes on tobacco and alcohol; and vehicle registration fees.

If you look at this chart from the Policy Forum, you’ll see that income and sales tax revenues have risen along with the economy in recent years (although you’ll notice the effect of 2014 income tax cuts), while corporate taxes have not.

And the Policy Forum paper says corporate taxes have lagged because of a “Big Giveaway” that Gov-elect Evers ran on repealing for large companies.

Corporate income tax collections peaked in 2015 at just over $1 billion and have been decreasing every year since. In 2018, collections were $893.9 million, down 2.9% from 2017. A likely contributor to the decrease in recent years is the phase-in of the manufacturing and agriculture tax credit. The credit lowers the effective tax rate for manufacturing and farm profits from 7.9% to 0.4% for the corporate income tax and effectively lowers the marginal individual income tax rate by a similar amount (from 7.65% to 0.15% in the top bracket).

In addition to the corporate tax cuts, the alleged decline in state and local tax burden comes from another source related to the growing national economy.

[Unemployment insurance] tax collections fell 16.2% in 2018, to $629.8 million. This is the sixth consecutive decrease, with UI collections falling 50% since 2012.

What, your paycheck didn’t shoot up after employers had all that extra money to play with after their UI taxes went down by nearly $440 million over the last 3 years? Funny that…

If you look at the differences in state tax payments over the last 4 years, you can see that the increase in taxes that everyday people pay compared to the cut for businesses. I’ll also include the assessments given to Wisconsin hospitals to help pay for Medicaid, as that also declined by nearly 10% in 2018.

Change vs 2014 taxes, in millions

While corporations and other businesses in Wisconsin have been paying less, individuals have been paying more in taxes. And it gets worse when you go down to the local level. The largest source of local tax revenue is one many of you get extra familiar with this time of the year – the property tax. Net (post-credit) property taxes account for nearly 94% of the local tax revenue under the Policy Forum’s definition, and they have risen by relatively small amounts in each of the last 3 years (including 1.6% in 2018).

But the property tax has not been enough for local governments to survive upon in recent years, and it has led an increasing amount of taxes being levied at the local level.

The same economic forces affecting the state sales tax also impact the 66 counties with a 0.5% sales tax. County sales taxes generated $384.2 million in 2018, a 6.3% increase. The healthy increase in collections reflects, in part, the enactment of the sales tax in two new counties: Brown (effective January 2018) and Calumet (April 2018). (Sheboygan County also added a local sales tax in January 2017) Local sales tax collections grew just under 23% over the past five years, but the increases have been larger recently as more counties adopted the tax….

Wheel taxes have been an option since the 1970s, but were seldom used until recently. Our 2018 Focus #10 noted in 2011, only four communities had wheel taxes, but as property tax levy limits have tightened and state aids to local governments have lagged in recent years, more communities have adopted them. In 2019, 20 municipalities and eight counties will collect the fee. Due to this increased use, revenues have grown significantly. In 2018, local wheel tax collections jumped 64%, to $33.9 million. Over the past [two] years, collections more than tripled.

And of course, individuals likely are paying a higher percentage of their incomes on these new sales and wheel taxes, while businesses got a brand new property tax break for a 2018 Christmas present, due to a 2017-19 budget provision that removed of the state’s personal property tax on machinery and many types of equipment.

In addition, deinvestment in the Wisconsin highways caused the state’s road quality to be among the worst in the nation (and led to all of the wheel taxes to make up the difference). And a Walker/WisGOP failure to build up Internet technology for several years led Wisconsin to end up in the bottom half for internet speed and access, particularly in rural areas that continue to bleed jobs and people.

So while Republicans may portray today’s Wisconsin Policy Forum report as a positive sign, it actually illustrates why this state fell behind in the Age of Fitzwalkerstan, and why Republicans lost in all non-gerrymandered elections last November. Gov-Elect Evers needs to start leveling the playing field back, and make this state’s corporations and businesses chip in the same way the rest of us have been in the 2010s.

Not only did typical Wisconsinites get a very small amount of the “reduced tax burden” that Robbin’ Vos is bragging about, but how did this strategy of cutting taxes on corporations help us economically? Wisconsin has badly trailed the economic recovery in the US over the last 8 years, with 29 straight quarters in the bottom half of the country for job growth, and wages that are well below many of our bordering states, including the worst manufacturing wages in the Midwest.

Wisconsin's oligarchs were given the chance by the GOP to show that trickle-down and austerity could work in our state, and they failed miserably at it. In addition, the rich and corporate just got additional massive breaks from the GOP Tax Scam in DC, while many of us in Wisconsin will be facing Federal tax PAYMENTS in the coming months due to limits on the deductions for many of the state and local taxes that the Policy Forum described in their study.

Now it’s time for the WisGOP puppetmasters to pay up for what they’ve been taking from the rest of us.