REPORT: Wisconsin Tax, Business Climate Among Worst in Nation
Wisconsin’s business tax is the 5th worst in the nation and the state’s overall business climate is 43rd in the country, according to the Tax Foundation, a non-partisan policy center based in Washington, D.C. USA Today reported on the tax climate study and summarized the situation in Wisconsin.
“Wisconsin’s income tax policy was the fifth-worst of all states for business, according to the Tax Foundation. Wisconsin collected $149 in corporate income taxes per capita, in the top third of all states. In addition, the state brought in $1,128 in individual income taxes per capita, the 10th highest of all states. The Tax Foundation lists Wisconsin as a state where job growth has been hampered by taxes. The state’s unemployment rate, however, was lower than the national rate in January.”
Speaker Robin Vos (R) tweeted a link to the news article on Monday with the simple, straightforward assessment, “Not good.” Vos has repeatedly said he wants to simplify the state tax code while reducing taxes. “We want to have a reduction in incomes taxes,” he told the Milwaukee Journal Sentinel in January.
Governor Scott Walker’s proposed state budget includes a small $300 million tax cut spread out over two years, which equals roughly $100 per family per year.
Other governors around the country are moving aggressively to cut taxes. The USA Today article about the Tax Foundation survey pointed out that:
“Indeed, all but one of the states with the best tax climates for business do not levy a personal income tax, corporate tax or sales tax.”
In Louisiana, Governor Bobby Jindal has boldly proposed erasing corporate and personal income taxes. Governor Mike Pence of Indiana has proposed a 10% across the board tax cut. Other states are lowering or completely eliminating some income taxes.
Writing in the Wall Street Journal, respected national economist Art Laffer and Stephen Moore, a member of the paper’s editorial board, concluded that lower tax rates and reduced regulatory burdens give some states a boost in the competition for pro-growth economic environments.
“We predict that within a decade five or six states in Dixie could entirely eliminate their income taxes. This would mean that the region stretching from Florida through Texas and Louisiana could become a vast state income-tax free zone,” Laffer and Moore wrote as they described how “Blue States” are losing jobs and workers to “Red States.”
While Wisconsin ranks 43rd worst in the nation for business climate, Minnesota ranks 45th and Iowa 42nd. Illinois, for all of its state financial woes, beats Wisconsin with a rank of 29th in the country, and Michigan stands tall as it ranks 12th in the nation.
The reason Michigan ranks so high is because of broad based tax reform that, among other things, eliminated tax credits for favored industries. “On January 1, 2012, the MBT [Michigan’s old business tax system] was replaced with a flat 6 percent corporate income tax that was entirely free of tax preferences like credits for specific industries,” the Tax Foundation survey concluded.