Total state and local taxes were nearly unchanged in 2014, rising 0.2% to $27.6 billion. State tax collections declined 0.6% due largely to individual income tax cuts, while local taxes rose 1.6%. State-imposed limits on property taxes limited local tax growth. However, an 8.0% increase in federal tax collections pushed up the total tax burden from 30.4% to 31.3% of personal income.
As economic conditions change and elected officials tinker with tax laws, tax collections can rise and fall. Both were in play during fiscal 2013-14 (2014). Wisconsin’s economy continued to expand, albeit slowly, and the state’s unemployment rate dropped. When residents are working and families spend more because they feel financially secure, state sales and income tax collections climb. During expansions, business profits rise, with corporate and individual income taxes moving in tandem. At the same time, several tax increases at the federal level helped drive up federal taxes paid by state residents. At the state level, tax collections were tempered by several income tax cuts and continued state tightening of local property tax limits. Unfortunately, it is not always easy to separate the impact of the economy from state and federal policy changes.
Total Taxes Overview
Total taxes—the combination of federal, state, and local taxes—paid in Wisconsin rose 5.1% in 2014, due largely to an 8.0% jump in federal taxes. Local taxes—mostly property taxes—rose 1.6% from $10.0 billion to $10.2 billion, while state collections fell 0.6% from $17.5 billion to $17.4 billion. The drop in state taxes was due mostly to declining income and unemployment insurance taxes.