Boots & Sabers

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Tag: Income Tax

Positioning Wisconsin’s Tax Climate for the 21st Century Economy

The MacIver Institute has a great blueprint for smoothly lowering Wisconsin’s income tax to a flat 3%.

This report sets out to explain why Wisconsin should continue to ratchet down its relatively high individual income tax system and many different rates to one flat rate. Evidence from a variety of sources – economic, social, and fiscal health metrics, as well as academic studies – demonstrates the benefit of a lower and flatter income tax structure. After examining Wisconsin’s position within the Midwest and considering recent reforms around the country, this report will recommend that Wisconsin transform its progressive income tax to a flat 3 percent tax rate for all taxpayers over an eight year period. In subsequent papers, we will continue to build our case through a comparison with Indiana, a state similar in size and demographics to Wisconsin, and will recommend specific steps that Wisconsin can take to make a flat tax a reality.

A systematic glide path to a 3 percent income tax rate would give Wisconsin the most competitive income tax among Midwestern states while greatly improving the state’s attractiveness on a national level. Such a move would have a significant impact on the incomes of all Wisconsinites and most importantly, would allow working class people to keep more of their income. A 3 percent flat tax would be a tax cut for everyone in Wisconsin. Under the current “progressive” tax code, our lowest tax rate of 4 percent for those who make just $11,120 per year is the 4th highest tax rate among the 33 states with a progressive income tax system.

Spacing out the rate reductions over a number of years protects the state budget from sudden and steep revenue drops, giving sufficient time to make gradual adjustments so the transition to the new tax system is smooth.

I’d prefer a glide path to 0%, but maybe we can work on that if Wisconsin can get this done.

Wisconsinites Saving a Bundle on Income Taxes

Great news!

Wisconsin wage earners and state coffers saw a $423.6 million reduction in income taxes as a result of rate cuts enacted in 2013 and 2014, according to new data from the state Department of Revenue.

That’s about $30 million more than the nonpartisan Legislative Fiscal Bureau estimated in July 2014 just after the second tax cut was enacted. The new figures are based on actual tax collections for 2014 compared with 2012.

Of course, we must remember that in the context of other states – including the 7 states that don’t have an income tax – that Wisconsin’s tax burden is still way too high. We have made progress, but there’s still a long way to go.



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