Things We Thought We’d Never See at the Tax Foundation, But Thanks to the Wisconsin Senate

June 28, 2007

  • A state legislative body has voted to double its tax collections in one year.

The Wisconsin Senate passed a budget plan to increase taxes $15.2 billion in fiscal year 2009. That would more than double Wisconsin’s tax collections of $13.8 billion in fiscal year 2006, according to the latest available data from the Census Bureau.

  • A state legislative body has voted to raise taxes by almost the same amount as the state’s taxpayers send to the federal government in income tax payments.

The $15.2 billion tax increase is only slightly less than the $15.8 billion Wisconsin taxpayers sent to the IRS for income taxes in 2005. And that’s just the increase!

  • A state legislative body has voted a tax increase equivalent to 50 percent of general fund revenue. See Table 1.


    Table 1: Top Ten Tax Increases at the State Level, Compared to Wisconsin Senate Budget (Percentage of State General Fund Revenue), 2000 – 2009

    Rank

    State

    Tax Increase as a Percentage of State General Fund Revenue

    Year

    N/A

    Wisconsin*

    50%

    2009

    1

    Nevada

    14.05%

    2004

    2

    New Hampshire

    13.54%

    2000

    3

    Tennessee

    11.75%

    2003

    4

    Nevada

    10.43%

    2005

    5

    Indiana

    10.08%

    2003

    6

    Idaho

    8.87%

    2004

    7

    New Hampshire

    7.52%

    2001

    8

    Oregon

    7.5%

    2004

    9

    New York

    6.2%

    2004

    10

    Ohio

    6.09%

    2004

    * Proposed. The ten ranked tax increases were signed into law. Wisconsin’s tax increase has passed the Senate but still must be considered by the General Assembly and signed by Gov. Doyle.

Several low-tax states have enacted tax hikes that increased general fund revenue by more than 10 percent, but none has ever increased it as much as 15 percent. By comparison, the Wisconsin Senate budget’s 50-percent hike in the general fund is off the charts.

  • A state legislative body has passed a tax increase equal to six percent of a state’s gross domestic product (GDP). See Table 2.


Table 2: Top Ten Tax Increases at the State Level, Compared to Wisconsin Senate Budget (Percentage of Gross State Product)

FY 2000 – 2009

Rank

State

Tax Increase as a Percentage of Gross State Product

Fiscal Year

N/A

Wisconsin*

6.0%

2009

1

Indiana

0.446%

2003

2

Tennessee

0.432%

2003

3

Idaho

0.407%

2004

4

New Jersey

0.402%

2007

5

Massachusetts

0.398%

2003

6

Connecticut

0.354%

2004

7

Ohio

0.343%

2004

8

New Jersey

0.314%

2003

9

Nevada

0.3%

2004

10

New Hampshire

0.288%

2000

* Proposed. The ten ranked tax increases were signed into law. Wisconsin’s tax increase has passed the Senate but still must be considered by the General Assembly and signed by Gov. Doyle.

Whenever a politician wants to make a tax hike appear small, he compares it to the state’s entire economy, which is measured by the gross state product. No state has ever enacted a tax hike so large that it equaled even one-half of one percent of gross state product. But even by this measure, the Wisconsin Senate budget is a phenomenon. The tax increase would be six percent of gross state product. That’s more than 13 times larger than the previous high of .446 percent set by Indiana in 2003.

In tax policy it is often said that there is nothing new under the sun. The Wisconsin Senate proved that this is far from the case.


Topics


Related Articles