With Tax Day looming later this month (though three days after April 15 due to (1) the weekend and (2) Emancipation Day in the District of Columbia) April 17, WalletHub has two things to say about Wisconsin’s tax burden in comparison with the other 49 states.
One simple ratio known as the “tax burden” … measures the exact proportion of total personal income that residents pay toward state and local taxes. And it isn’t uniform across the U.S., either.
To determine which states’ residents bear the biggest tax burdens, WalletHub’s analysts compared the 50 states across the three tax types that make up state tax burden — property taxes, individual income taxes, and sales and excise taxes — as a percentage of total personal income in the state.
Wisconsin ranks 11th, lower than Minnesota (fifth) and Illinois (ninth), but higher than Ohio (13th), Iowa (19th), Indiana (23rd) and Michigan (26th) within the tax hell that is the Midwest. Wisconsin ranks 11th nationally in property tax and income tax burden, and 37th highest in sales tax burden. (Not to worry, some idiot in the Legislature will propose raising sales taxes in 5 … 4 … 3 …)
This is an interesting factoid …
… that proves that Wisconsin is not really a red state, regardless of recent election results. To get Wisconsin down to 30th (which is where Nevada now is) would require an overall tax burden cut of almost 13 percent. For that matter, to get to 18th, the average for Democrat-dominated states (like Taxachusetts — I mean Massachusetts, which is 18th), would require a 4.6-percent decrease in tax burden, which is not going to happen in this state.
Tax Day can be a painful reminder of our large investment in the operation of federal, state and local governments, though many of us are unaware of their precise roles in everyday life. As a result, this creates a disconnect in the minds of taxpayers between the amount of money we should fork over every April and how much we ultimately deserve in return from our government.
Perhaps that’s why nearly three out of five U.S. adults feel they pay too much in taxes and why Americans estimate that Uncle Sam wastes slightly more than half of every tax dollar — higher than what they approximate state and local governments squander. We do know, however, that taxpayer return on investment, or ROI, varies significantly based on simple geography. Federal income-tax rates are uniform across the nation, yet some states receive far more federal funding than others. But federal taxes and support are only part of the story.
Ideological differences regarding the role of local taxation have resulted in dramatically different tax burdens. This begs the question of whether people in high-tax states benefit from expectedly superior government services or if low-tax states are more efficient or receive correspondingly low-quality services. In short, where do taxpayers get the most and least bang for their buck?
WalletHub sought to answer that question by contrasting state and local tax collections with the quality of the services residents receive in each of the 50 states within five categories: Education, Health, Safety, Economy, and Infrastructure & Pollution. Our data set includes a total of 23 key metrics.
This ranks Wisconsin 15th best in taxpayer ROI, where our 35th lowest (or 15th highest) per-capita tax burden (adults 18 and older, as opposed to tax burden as a percentage of income, as in the first comparison) is offset by our supposed sixth best government services.
By this comparison Wisconsin has the best schools in the nation (including K–12 schools and postsecondary schools, plus high school graduation rates, and despite the incessant whining that the state refuses to give school districts every last cent of tax revenue), 25th best health (including hospitals, health insurance and the health of the population), 11th best safety (violent and property crime rates and fatal crash rates), 10th best economy (including household income, job growth, unemployment and underemployment, poverty rates and “economic mobility”) and 28th best infrastructure and pollution (road and bridge quality, commute time, park and recreation spending, water quality and air pollution).
Obviously different metrics, or different importance paid to certain metrics, will change a state’s ranking. There is no question Wisconsin has high taxes, and taxes that have not been cut nearly enough by our Republican governor and Legislature. And, as Boise State University Prof. Nicholas Luke Fowler points out:
There tends to be a non-linear relationship between spending and performance outcomes. A study from the later 1990’s found that environmental outcomes were connected more to socio-economics and politics than to spending levels. Similar studies have found the highest spending levels tend to be in the worst schools, but that’s because the task of educating students in those schools is the most intensive. On the other hand, providing adequate resources to a program is always a predictor of success.
Nevertheless, it’s not the level of tax burden that matters but where that money is going and how much “capacity” the state has that determines the quality of services. A state with a lot of money can foolishly spend it, while another state with lower resources can be much more economically and get better outcomes.
Northern Illinois University Prof. Peter Burchard adds:
More dollars for better services: Better has become a matter for the marketing department — an art of selling and not measuring. Every city thinks it’s the best with best services. Political governments are ego-driven governments. …
Government is skilled at maintinaing the status quo while calling their work innovative. … Local and state governments need to rethink their service levels. We often innovate to maintain the status quo. If disruptive innovation is measured by deep cost savings and managing toward lower service levels (which I think it should), governments can become more efficient. …
The setting for waste and inefficiency is in the obsession for best services — government services staffed and budgeted at a level that few citizens ever need. Many local governments are obsessed with “best practice,” when good enough will work. … The clamor for being the best without reducing costs or service levels is costly and unnecessary. I also think that many local government employees don’t have the business acumen to run modern/complex organizations. …
In reality, residents don’t need best practices. They need logic, reasoning and a fair price.
I’m not convinced our state and local taxes are being spent efficiently. Look at the state Department of Transportation audit as evidence of how road projects double in price from the DOT estimates for one example. This state has far too many non-teachers in school districts with big titles (and big salaries to match) that do not include the words “principal” or “superintendent.” We are second only to Illinois in the number of units of government in this state (3,120). And as we know state and local government is literally twice the size it should be given the past 40 years of inflation and population growth, something Republicans aren’t doing anything about, and Democrats will do nothing about.