Wisconsin has to give Governor Walker and the Republican majority due credit for getting many more Sconnies interested in state and local government, government programs, tax burdens, the social costs of budgetary problems and fixes, and planning for the future progress (or regression) of the state. (To say nothing of getting hundreds of thousands of citizens out in the fresh air on walk-abouts.) We are all being presented a great opportunity to become more wonkish about government and its costs and benefits. In that sense the Governor and GOP have done a service in shaking many of us out of an apathetic inclination to simply accept "business as usual" with respect to state and local government. When the Governor says "business as usual" has to end, he is right. But how it is going to become "unusual" is the rub.
The Tax Foundation, a non-partisan research group that studies state and federal tax policies has a wealth of data and analysis on state and local tax burdens here. Most of its data is available in Excel spreadsheets for manipulating and moving data around.
Below is a chart from Tax Foundation's data showing how Wisconsin's state and local tax burden per capita, as a percentage of per capita income, compared to that of seven other midwestern states in 2009. The United States' midwest region is typically defined as including four more states, Kansas, Nebraska and the two Dakotas. I don't include them in the chart, as I think they are far more agriculture oriented economies than the included states, and Kansas and North Dakota derive more of their tax revenue from severance taxes than the included states, which means they spread some of their tax burden to income earners in other states. By way of example, Alaska always ranks #1 in lowest state and local tax burdens per capita resident, because citizen-consumers all over the United States subsidize the payment of the total tax revenue collected by Alaska by means of its oil and gas severance taxes. (Do you really think BP is absorbing all the costs of the Deep Water Horizon spill?) Thus, the Tax Foundation finds that in 2008, Alaska's state and local tax collections were the highest of any of the 50 states, at $7,684 per capita, but about $5,000 of that got paid by individuals in the Lower 48, when they filled up with gas and otherwise consumed Alaska's energy products. Apropos the great gimmick Alaska has going, when a state has a large tourism industry, it also serves to shift state and local tax burdens to the citizens of other states that like to vacation in the state. This is another reason why tourism is such a key component of Wisconsin's economy, and why we need to keep our environment fetching for visitors.
The Chart with 2009 data:
Errata: The label "9 state average" in the above chart should read "8 state average." The data points are in fact averaged over 8 states.
The Tax Foundation's methodology for gathering the data is located here.
This data includes corporate taxes, property taxes, excise taxes, and income taxes. It shows that compared to the other seven states, Wisconsin's per capita tax burden is about $500 higher than the average, but that our per capita income is also about $500 per person higher than the average. When you consider that federal income taxes and employment taxes also have to come out of that $500 average extra income, you can make a case for Wisconsin's state and local tax burden being too high, all services to citizens (schools, universities, police and fire protection, garbage pick-up, clean lakes) being provided thereby assumed as equal.
Indiana is being held up by conservatives as a very well run state, and Mitch Daniels, its governor since 2005, is being touted in the national press as an attractive candidate for the GOP to run against President Obama next year. If you lived in Indiana in 2009, your state and local tax burden would be $1,030 less than an average Wisconsinite. But your income would be about $4,000 less.
Finally, people talk about the budget repair bill and new proposed budget posing a risk of turning Wisconsin into "Wississippi." Much of that is intended as hyperbole to send a political message. I come from the deep South. I know the deep South. I don't have a concern over that result coming to pass. I do, however, have a concern over our state regressing under the GOP's plans. Here is a similar chart to the one above, showing the same kind of data, and comparing Wisconsin to seven southern states. I left Texas and Louisiana out of the mix (and added the Carolinas) for a similar reason I described above, both garner substantial out-of-state support for their revenues from oil and gas severance taxes.
If you lived in Georgia, your 2009 state and local tax burden on average per capita would be about $1,100 less than in Wisconsin, but your income would be $3,500 lower than in Wisconsin. The discrepancy would be even larger in favor of Wisconsin in the other states. In my opinion, the services we get for our dollars spent on local and state governments far exceed that in the seven southern states, particularly in the fields of schools, higher education, municipal services and health care for vulnerable citizens.
This doesn't mean we shouldn't try to get every bang we can for our tax buck by making government more efficient, and by a more equitable sharing of the costs of government, with employees picking up a small portion of their benefit costs, as they have offered to do. But I think this data does put into perspective the idea that we are in some deep fiscal crisis and that our state and local taxes are completely out of control.
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