Low- and middle-income families in Wisconsin pay a higher share of their income in state and local taxes than do the richest families in Wisconsin, according to a new study by the Institute on Taxation & Economic Policy (ITEP).
According to the ITEP study, “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States”:
• Wisconsin families earning less than $20,000 – the poorest fifth of Wisconsin non-elderly taxpayers — pay 9.2 percent of their income in Wisconsin state and local taxes.
• Middle-income Wisconsin taxpayers – those earning between $35,000 and $57,000 – pay 11.2 percent of their income in Wisconsin state and local taxes.
• But the richest Wisconsin taxpayers – with average incomes of $1,116,000 – pay only 8.0% of their income in Wisconsin state and local taxes.
The main reason for the unfairness of Wisconsin taxes is the state’s reliance on regressive sales and excise taxes, which fall disproportionately on the worst-off families, and on property taxes. The state’s one progressive tax, the income tax, is not enough to offset the unfair impact of these other taxes.
The ITEP analysis, which takes into account the most recent tax changes in each state, found that the poorest fifth of Wisconsin taxpayers pay 6.3 percent of their income for sales and excise taxes. That is seven times more than the richest one percent of taxpayers, who pay just 0.9 percent of their income for sales and excise taxes. Property taxes in Wisconsin are somewhat less regressive than sales taxes, with low and middle income taxpayers paying between 3.0 and 3.6 percent of their income for property taxes, compared to 1.7 percent for the richest one percent of state residents.
ITEP publishes a version of “Who Pays?” about every five years or so. In addition to the full report, ITEP has also prepared individual state-specific fact sheets that accompany the report.
