Wisconsin state Sen. Roger Roth hits the mark: Tax burden at a 50-year low

Is Wisconsin’s tax burden at a 50-year low?

That was the claim made by state Sen. Roger Roth, R-Appleton, when he gave the GOP response to Gov. Tony Evers’ 2020 State of the State speech.

In the Jan. 22, 2020, speech, Roth touted Republican-backed investments in the state’s infrastructure, worker training and childhood education. The results, he said, are economic growth, low unemployment, higher wages and frozen college tuition without raising taxes. 

"The average resident’s tax burden is at its lowest level in nearly 50 years, while incomes continue to grow," he said.

Is he right?

When asked for backup, Roth’s office pointed us to the Wisconsin Policy Forum’s January 2020 report, "Tax Burden Falls Again." The report is an annual review of state and local taxes relative to state residents’ income. The Wisconsin Policy Forum is a nonpartisan research organization.

The tax burden is the total share of taxes compared to income. The Wisconsin Policy Forum compiles all the state and local taxes in Wisconsin, using a variety of reports, such as the state’s Annual Fiscal Report, and information from state agencies.

State and local tax revenue is compared relative to cumulative personal income of all income reported in Wisconsin. Those income numbers are from the U.S. Bureau of Economic Analysis.

The forum’s report shows Wisconsin's tax burden for 2019 was the lowest since at least 1970, which is as far back as the organization has data.

State and local taxes, combined, took up 10.3% of residents’ income in 2019, down slightly from 10.4% in 2018. The state has established a new tax burden low each year since 2015.

Jason Stein, research director at the Wisconsin Policy Forum, noted that doesn’t necessarily mean everyone is paying 10.3% of their income. Incomes and taxes vary region to region and person to person.

Noah Williams, a professor of economics and director of the Center for Research on the Wisconsin Economy, echoed that point and said the policy forum’s approach is a reasonable one to use.

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The report shows overall tax burden has consistently trended down over the last 50 years, from an average of 14% in the 1970s to 11% across the 2010s.

Behind the numbers

The drop is not entirely the result of reduced tax collections.

Indeed, according to the forum, state and local tax revenues increased by 4.5% in fiscal year 2019 — the most since 2011. 

So what’s going on?

Well, income has increased faster than average tax collections. Income has been on an upward trend since 2009. The policy forum found income grew by 5.1% in calendar year 2018, the most recent year available at the time of its report.

Because income growth outpaced the increase in tax collection, the tax burden decreased.

While taxes are determined by state and local governments, many other economic factors help drive income levels, Stein said.

"If the economy’s doing really well, it’s not purely a function of what’s happening at the state level," Stein said. "If it was doing really poorly, it wouldn’t be purely a function of what’s happening at the state level either."

Roth claimed "the average (Wisconsin) resident’s tax burden is at its lowest level in nearly 50 years, while incomes continue to grow." 

The numbers check out.

While tax collections are up, incomes have been growing at a faster rate than taxes. Thus, the tax burden continues to edge down.

We rate his claim True.