Boots & Sabers

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0726, 27 Jun 23

Republicans finally propose a tax cut

My column for the Washington County Daily News is online and in print. Here’s a taste:

Wisconsin currently has four income tax brackets. Under the Republicans’ plan, they would reduce it to three brackets and reduce the rates on all three remaining brackets. Simply put, everyone who pays state income taxes would benefit from paying less.


While the Republicans push for a tax cut and the Democrats oppose it, let us remind ourselves of why it is necessary. As this column recounted last week, Wisconsin is facing an existential threat to its economy and ability to fund government. People are leaving the state. Wisconsin is now losing population. One of the reasons is that the inherent mobility of the modern workforce means that people are moving to states that provide a good quality of life and a lower tax burden. The income tax is a big part of that.


This fact is particularly true for high-income people. Low-income people already do not pay much, if anything, in income taxes. According to those same Department of Revenue statistics, the bottom 40% of income taxpayers (474,050 filers) paid an average of just $303.80 in income taxes. That only includes people who earned enough to file taxes. Nobody is going to move to another state to save $303.80 in taxes. But for the top 40% of tax filers, who are paying thousands of dollars every year in state income taxes, the math is different. This is especially true for tech-sector professionals where remote work has become the norm. Retirees have been fleeing the state for decades in search of lower taxes and warmer climes, but the advent of the remote technical workforce has made this choice viable for professionals in the middle of their careers.


This column has long advocated for abolishing the state income tax. It can be done. It should be done. But it will not be done because neither elected Republicans nor Democrats have the will to do it. As a second choice, a true flat income tax would set Wisconsin apart and catapult it into the upper echelon of attractive tax states for mobile affluent professionals. As a third choice, the Republicans’ current proposal is a step in the right direction. It will not move the needle substantially, but it will help.


As it stands, even with this tax cut, the current budget proposals still increase state spending by at least 10% over the previous budget. That is an abomination that explains why taxes will not be reduced further.


0726, 27 June 2023

1 Comment

  1. MjM

    As a second choice, a true flat income tax would set Wisconsin apart and catapult it into the upper echelon of attractive tax states…

    Not really. Surrounding states IL, MI, IN and KY are flatliners.

    The issue is rates. Which the exception of out-of control MN, WI has the highest income tax rate in the Midwest, South, and Western Plains states. In fact, WI has the 9th highest income tax rate in the nation.

    If WI were to set a flat rate of, say, 4-5.5%, it would not do much to stem the population decline because that is pretty much the range of every nearby state flat rate state – IN has a flat 3.15% – and is also in range of or close to every other graduated rate state (again with the exception of the super tax states).

    But there is another tax issue to consider: Property taxes.

    WI is also #6 nationally for highest mean property taxes. For comparison, IL, with its flat income rate of 4.95%, is #2 worst while FL, with no income tax, is #26. IOW, it isn’t just income taxes that create snowbirds.

    I repeat: the overall problem is government is too damn big. Until that is addressed, until it is cut in, at least, half, everything else is just a shell game.

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