Due to a combination of policy changes and economic growth, Wisconsin’s income tax per person has grown from $38 in 1960 to $1,260 in 2011. From 2001 through 2010, Wisconsin’s 6.6% increase in per capita income taxes was “average” compared to other states. Figures from 2010 returns show the progressivity of the state’s income tax; that is, those with higher incomes pay a greater share of that income in tax. The progressivity is the result of the tax rate schedule and the elimination of the standard deduction as income rises.
Every April, many Wisconsin taxpayers rush to finish their tax returns and file them with both the IRS and the state Department of Revenue. And most years, they must comply with new or changed tax laws.
Making sense of the Wisconsin income tax is important, for it is state government’s largest source of revenue. In 2011, it generated $6.7 billion for state coffers, or more than half of all general fund taxes. When all state and local taxes are included, the income tax is second only to the property tax.
Enacted in 1911 as the first state income tax, the Wisconsin tax has undergone major changes over the past 100 years in how much it collects, how it is structured, who pays it, and how it compares with similar taxes in other states.
REVENUES
In 1960, Wisconsin collected $146.3 million, or $38 per person, in state income taxes. In 2011, collections totaled $6.7 billion, or about $1,260 per person. The increase was due to a combination of economic growth, inflation (particularly during the 1970s and early 1980s), and changing tax policy.