Should Wisconsin eliminate its state income tax?
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What’s the point? Spending is what drives taxes higher.
By David Blaska
Toss back a wee dram of whiskey this month to celebrate Tax Freedom Day in Wisconsin. Last year, taxpayers celebrated on April 27 — the day we Badgers quit working for local, state, and federal government and started paying ourselves.
The personal income tax pays most of state government’s bills, accounting for $8 billion of the $15.5 billion in total biennial revenue — compared to $5.2 billion in state sales tax. (Corporate income tax yielded another $921 million.)
Of course, you could flip that around. Reduce income taxes and raise the sales tax. Only seven states have lower sales taxes than Wisconsin and that includes five states with none at all. Oregon has no sales tax while Washington state has no income tax.
Progressives consider the sales tax to be regressive. La Follette’s faction started the nation’s first income tax in 1911, two years before the 16th Amendment. The top marginal rate was 2% and corporations paid more than individuals.
Nationally, progressives needed a federal income tax to replace the tax on booze, which funded nearly one-third of government (second only to tariffs on imported goods) because they were concocting another social experiment: Prohibition. Prohibition was eventually repealed, but not the income tax.
While Wisconsin sales taxes are comparatively low, our state personal income tax is 13th highest, measured per capita at $1,180, according to the Tax Foundation. Still well behind New York’s leading $2,699 and next-door Minnesota’s $1,775, but seven states don’t tax income.
Abolish income taxes? Tennessee is phasing out its income tax. To compensate, its state and local sales taxes are the highest in the nation at 9.45% (to Wisconsin’s combined 5.4%). Tax what you will, it comes down to spending or, as Democrats call it, “investment.” When was the last time a Democrat supported a tax break of any kind?
Wisconsin Tax Freedom Day, April 27, was the 40th latest in the nation — three days better than Illinois and Minnesota but three days behind the national average, and much later than Iowa’s April 14.
The Tax Foundation says Americans spend more on government taxes than they do on food, clothing, and housing combined. It’s enough to drive one to drink.
David Blaska is a Madison columnist and blogger. Find his blog at davidblaska.com.
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