Wisconsin state-local taxes claimed 11.9% of state personal income in fiscal year 2011, up from 11.7% the prior year and 11.3% in recession-plagued 2009. This year’s increase was largely due to recent tax increases and to the economic recovery adding to income tax collections.
- State and local governments here collected taxes and
fees totalling $25.9 billion. - Individual income tax collections were $6.7 billion
in 2011, up 10% from $6.1 billion in 2010. This year’s
increase was the largest one-year jump since 2000. - Property tax revenues increased 2.6% from the prior
year, the smallest increase since 2005, when they rose just
2.5%.
When a recession hits, tax collections often drop faster than incomes, resulting in a corresponding drop in tax burden. With collections lagging, lawmakers often raise taxes to maintain a balanced budget. With recovery, tax revenues, particularly corporate income taxes, tend to rebound faster than income, and the tax burden rises. Recent Wisconsin history is a case study of this cycle.
In fiscal 2009, as the “Great Recession” deepened, tax collections here dropped significantly, and taxes claimed their smallest share of income in more than four decades. Then, to balance the 2009-11 state budget, lawmakers increased taxes, most notably on tobacco, corporations, and high-income filers. Higher taxes combined with the recent economic recovery led to state and local taxes this year claiming their largest share of personal income since 2006.