State Views: Taxes in Wisconsin going down once again
Wisconsin is regarded as a high-tax state. Excessive taxes can cripple family income, cut into savings, leisure activities, 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 to create jobs and grow the economy.
Certainly, a reasonable level of taxes is needed for necessary government services. Income tax revenue is deposited into the state's General Fund and used primarily for public education, medical assistance, corrections, local assistance and the UW System. Property tax revenue is used for elementary and secondary school districts, technical colleges, and local government services such as police and fire protection, sanitation and transportation.
In the last few years, the Legislature has worked to reduce taxes while maintaining a commitment to those core services. Last 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.
As a result, Wisconsin's tax burden has lightened. According to the Wisconsin Taxpayers Alliance, Wisconsin's rank for states with highest taxes fell from ninth to 10th. Historically, Wisconsin has been among the five most taxed states. While the lower ranking is welcome news, more needs to be done.
The Legislature has taken additional steps to reduce taxes. The new state budget includes $1 billion in tax relief, including an income tax cut of $650 million, one of the largest in state history. The taxpayers alliance noted that if this cut had been included in its report, Wisconsin's ranking would have improved to 12th place. Income taxpayers will receive an average reduction of $152 in each of the next two years due to those cuts.
In addition, a $100 million increase in school aids was recently enacted, creating more property tax relief. While amounts will vary, the owner of a median-valued home should see a reduction of $18 in this year's tax and an increase of only $29 next year. This will mark the third year in which property taxes have gone up less than 1 percent on average. That is not insignificant because the last time property taxes rose by less than 1 percent in consecutive years was 1946!
Even so, funding for public education remains high. Total state aid for public 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 funds are directed to support public education, greatly exceeding any other expenditure 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 will return more money to taxpayers without sacrificing vital government services. These much-needed initiatives will reduce the tax burden for residents and make Wisconsin more attractive for job growth and economic development. For too long, tax increases were the status quo; but fortunately, times have changed, and taxes are finally going down.
Sen. Neal Kedzie, R-Elkhorn, serves the state's 11th Senate District. He can be reached at P.O. Box 7882, Madison, WI 53707-7882 or by calling 800-578-1457 or, in the district, 262-742-2025.