Wednesday, October 26th, 2016

Sullivan report’s suggested tax shift ignores history


The Sullivan report on Wisconsin’s workforce development was released last week to general praise. However, the report suggests a shift in in Wisconsin’s tax structure away from property and income taxes to the sales tax. Even if the idea was politically feasible, such a tax shift proposal ignores Wisconsin’s sales tax history, as I explain in this week’s article for the MacIver Institute.

The report is correct that more needs to be done to change the state’s tax policies. Our next door neighbor and competitor Illinois may be losing on the football field, but despite massive tax increases the burden of taxation on business is still either on a par with or less than the burden in Wisconsin. As the Sullivan report notes, Wisconsin has ranked in the top ten for tax burden since the Tax Foundation began ranking the states 37 years ago. Another report ranks Wisconsin fourth highest in percentage of personal income paid in taxes at 11%.

While the Sullivan report recognizes that Wisconsin has a problem, it misdiagnoses what the problem is.

“One way to remove this stigma is to reduce our reliance on personal income taxes and property taxes by shifting the burden to consumption tax.”

It’s not just a “stigma,” and what Wisconsin needs to do is reduce the overall tax burden – not merely shift the burden to the sales tax.

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