Wisconsin falls from top 10 taxed list

State fees for 2006 rank 11th in nation

The Associated Press

Wisconsin has moved out of the top 10 highest-taxed states in the nation for the first time since 1980.
Wisconsin's state and local taxes dropped to 11th in the nation in 2006, down from eighth in 2005 and sixth in 2004, according to a Wisconsin Taxpayers Alliance analysis of U.S. Census Bureau data.

The data, released every year at this time, is for fiscal year 2006 and compares state and local taxes to the state's total personal income.

"There were some states that leapfrogged Wisconsin," said Todd Berry, president of the Wisconsin Taxpayers Alliance. "They had been lower in rankings and they just moved above us."

Louisiana jumped nine spots to No. 5, and New Jersey jumped six to No. 9. Berry attributes those changes to sick economies.

But while Wisconsin's ranking dropped from eighth to 11th, the amount of taxes residents paid as a share of income went up — from 12.1 percent in 2005 to 12.3 percent in 2006. The 2006 national average is 11.6 percent.

"As the dust settled, it meant we dropped in ranking even though our taxes relative to income went up slightly," Berry said.

And taxpayers may not have felt the change in their pocketbooks because of the type of taxes that decreased: sales tax and corporate income tax.

"Both of those tend to reflect what's going on in the economy," said Berry, who points to 2006 as the beginning of an economic slowdown. "If the economy is slowing, if incomes are slowing … people tend to buy less and companies tend to become less profitable.

"Our personal income tax and property tax rankings — the two Wisconsin taxes that are markedly above the U.S. average — did not change in ranking."

As for what the future holds, there's still plenty of room for movement.

In West Virginia, at No. 10 in the rankings, state and local taxes were at 12.28 percent of personal income, while Wisconsin is at 12.26 percent. At No. 12, Rhode Island is 12.19 percent.

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