Tax day in tax hell?

It's time to pay the piper. Tax Day 2008. Today I'm forwarding a commentary by the Superintendent of Schools in Ripon, Wi, Richard Zimmer.

"In Wisconsin the recent tax debate has focused on the validity of the claims of some that our state is a "tax hell." The Wisconsin Taxpayers Alliance (WISTAX,) a non-profit and nonpartisan watchdog, regularly publishes information related to this debate. WISTAX uses total tax burden as its measuring stick, whic is the combination of state taxes, local taxes and common fees as a share of personal income as calculated by the U.S. Census Bureau.

In the past 50 years, Wisconsin has ranged from being #1 among states for its total tax burden to being #18. Oddly enough, both highest and lowest rankings occurred under Democratic governors. The highest tax ranking was under John Reynolds in 1964 when taxes consumed 12.6% of personal income. The lowest tax ranking was under Gaylord Nelson in 1960 when only 9.5% was taken by government. By comparison, the highest percentage of personal income consumed by Wisconsin taxes in the past 20 years was 13.7% in 1994 under Tommy Thompson.

Currently, using the system noted above, WISTAX calculates Wisconsin's ranking as 8th among the 50 states. That's because state and local taxes now take a 12.1% bite of personal income. While there are some who calculate Wisconsin's rank as 24th when all taxes, fees and federal revenues are included, most folks tend to use the 8th place ranking as the most legitimate - so that's the one that we'll use.

Since K-12 public education consumes approcxmately 40% of the Wisconsin budget, and since the UW System and the technical college system consume another 10% to push the education total to over 50% of the state budget, the issue of taxes and tax rankings are a key issue when discussing schools and our future workforce.

That being the case, let's tale a look inside the numbers. Wisconsin state and local taxes now consume 12.1% of personal income. Whether you think that amount is already too high for the services provided, or you'd be willing to pay even more for government services doesn't matter. The real question is, 'What would we have to do to drop our national tax ranking?'

WISTAX reports that in order to drop to the 26th ranking which would place Wisconsin in the bottom half of states, our state and local taxes would have to consume only 11.1% of personal income. That's right. The difference between being in the top ten and being in the bottom half is a 1% reduction in state and local taxes.

Thnk about how much you pay in state and local taxes. The per capita average in Wisconsin for its current 8th national ranking is $3,872. What that means is that a ruduction of $387 per person in taxes would drop Wisconsin to the bottom half of the national rankings.

Now, $387 is nothing to sneeze at. I'll be glad to accept $387 any time. But is $387 enough to condemn Wisconsin as a 'tax hell?'

The way this debate has raged for years, you would think that each of us paid many thousands of dollars in extra taxes each year. But WISTAX shows us that's not the case.

If you're wondering about the national average, it's 11.3% of personal income, which is 0.8% lower than Wisconsin's rate. The state with the highest ranking is Wyoming with a 15.1% tax burden. South Dakota has the lowest with 8.7%. Incidentally, I've never seen any reports that place South Dakota schools very high in the rankings for effectiveness. Meanwhile, Wisconsin spends more than most states on K-12 education, and its schools are consistently rated amont the best in the nation.

Now you have the information necessary to decide if Wisconsin is the 'tax hell' that it is purported to be by some folks. You might even decide to pack up and move somewhere else. No matter, you'll have objective data for use in the ongoing debate about taxes."