Wisconsin has long been known as a high-tax state.
Excessive income and property taxes can be crippling to Wisconsin families and retirees, which can cut into savings, a vacation fund, home ownership, and even day to day needs, such as food, prescription drugs, and health care.
High taxes can also drive away businesses, hurting Wisconsin’s ability both to attract and retain jobs and grow the economy.
Certainly, a reasonable level of taxes is needed to pay for government services, such as public schools, roads, and health care for those of lesser means. Income tax revenue is deposited into the state’s general fund, which is used primarily to fund five major programs: public education, medical assistance, corrections, local assistance, and the University of Wisconsin System.
Property tax revenue is used for elementary and secondary school districts, technical college districts, special purpose districts, and county and municipal government services, including police and fire protection, sanitation, transportation, and recreation.
Over the last few years, the legislature has been working to reduce taxes, while maintaining a commitment to those important core services. In the 2011-12 session, a property tax freeze was enacted, the first of its kind in state history. As a result, property taxes on a median-valued home decreased for the first time in 12 years. We also made it more difficult to raise taxes by adopting a bill requiring a two-thirds “super-majority” vote of the legislature in order to raise taxes.
As a result, Wisconsin’s tax burden ranking has improved. According to the Wisconsin Taxpayers Alliance, Wisconsin’s ranking for states with highest state and local taxes fell from ninth highest to tenth highest. That is a significant improvement, as Wisconsin historically has been among or near the top five of all high tax states. While the updated ranking is welcome news, there is more work to be done.
In the current session, the legislature has taken more positive steps to reduce the tax burden. The 2013-15 state budget includes nearly $1 billion in tax relief for Wisconsin taxpayers, including an income tax cut of more than $650 million, one of the largest tax cuts in state history.
The Taxpayers Alliance noted if this tax cut had been included in its recent report, Wisconsin’s ranking would have improved to twelfth place. As a result of the $650 million income tax cut, every state income taxpayer will receive an average income tax reduction of $152 in each of the next two years.
In addition to this impressive income tax relief, Special Session Senate Bill 1 was recently signed into law, providing $100 million more in K-12 school aids, thereby creating additional property tax relief for Wisconsin families, seniors, and businesses. While the amount of relief will vary around the state, the owner of a median-valued home should see a reduction of $18 in this year’s property tax and an increase of only $29 next year.
This will mark the third straight year in which property taxes across the state have gone up less than 1 percent on average. That is not insignificant, as the last time property taxes rose by less than one percent in consecutive years was 1946!
Along with these tax relief efforts, funding for public education remains high. Total state aid for K-12 education equates to $5,932 per pupil in 2013-14 and $6,119 per pupil in 2014-15. More than 39 percent of the state’s general fund expenditures are directed to support public education, which greatly exceeds any other expenditure area in the entire $70 billion state budget. Medical assistance, the second largest state expenditure, accounts for 15 percent of the general fund budget.
The tax reform measures approved by the legislature and enacted by the governor will put more money in the hands of Wisconsin taxpayers without sacrificing vital government services.
Taxpayers should see the results in both their income taxes and their property taxes. These much-needed changes will reduce the tax burden for Wisconsin citizens and make our state more attractive for job growth and economic development. For too long in Wisconsin, tax increases were the status quo; but fortunately, times have changed, and taxes are finally going down.
Senator Kedzie can be reached in Madison at P.O. Box 7882, Madison, WI 53707-7882 or by calling toll-free 1 (800) 578-1457. He may be reached in the district at (262) 742-2025 or online at www.senatorkedzie.com