You want progressive taxes? You want to sock it to the rich?
Well then, you should be right at home in progressive Wisconsin. The 3940 fat cats with more than $1 million in income in 2011 (.1% of the total taxpayers) paid 11.5% of the state incomes taxes that year. That’s 115 times their population weight
Those with incomes above $500,000 (.4% of the total) paid 17.3%. They are punching 43 times their weight.
In contrast, at the other end of the income scale, filers with incomes of $30,000 or less – about half of all filers – paid just 3.8% of all state income taxes.
These numbers from the non-partisan Wisconsin Taxpayers Alliance showed that taxpayers in the high income brackets paid at an average rate of about 6.5%. The top rate is 7.75%.
These high rates explain why we have so few rich people in Wisconsin. When they retire, they move to Florida or Arizona for at least six months and one day to avoid the 6.5% hit. Wouldn’t you if you were in their shoes?
Oddly, in one way, the absence of more high income folks has a positive sounding spin. While the state lags the nation by about 4% in per capita income, the median (50th percentile) household income is above the U.S average by about two points.
The Wisconsin middle class doesn’t get much of a break in terms of taxes either. They pay about 6.15%.
Gov. Walker has proposed small tax cuts to help those in the middle. If passed, the middle rates would fall to 5.94%.
With the recent windfall of $500 million in added revenues for 2013-2015, thanks to a slowly improving economy, he may be able to do more. Such cuts play well in a gubernatorial or presidential campaign.
The high end taxpayers in Wisconsin won’t be impressed by small cuts in the middle and lower brackets. Their attorneys and accountants will be advising them to take up residence in states with no or low income taxes. Florida and Texas are at zero, and Arizona’s top rate is 4.54%.
Then there are those long winters. The snow birds will keep flying south.
Gov. Walker misfired when he tried to lure Illinois residents to move north after the Illinois Democrats raised taxes. Rates there are still lower than Wisconsin’s.
But he should be able to reap some political hay in competition with Minnesota where the Democrats in charge raised $2.1 billion in new revenues, partly by taking its top income tax rate to 9.85%, the fourth highest in the nation. Some of the exodus will be pass-through corporations — S Corporations or LLCs — that pay taxes at the individual level.
Western Wisconsin will see an influx of Minnesotans, at least among those who can’t flee south.
