MADISON—In 2003, Wisconsin state income taxes paid by filers with incomes in the $35,000-$75,000 range were higher than in many other states. For single filers with incomes in this range, Wisconsin’s income taxes were among the top 10 nationally. For married, joint filers, Wisconsin ranked from 11th to 15th, depending on income. These are several of the findings in a detailed new study of income taxes nationwide published by the Wisconsin Taxpayers Alliance (WISTAX).

One issue often debated is the impact of Wisconsin income taxes on location decisions, both for young people and senior citizens. "People decide where to live for many reasons, but, from an income tax perspective, Wisconsin appears to be at a disadvantage," said WISTAX President Todd A. Berry. WISTAX is a nonprofit, nonpartisan organization dedicated to public-policy research and citizen education.

The WISTAX report notes that Wisconsin’s income taxes for single filers with incomes from $35,000 to $50,000 put the state at a disadvantage in attracting young college graduates. At $35,000 (9th) and $50,000 (7th), Wisconsin’s income taxes ranked significantly above those in Illinois (37th and 38th) and Iowa (20th and 24th). The Badger State’s ranking was also higher than Minnesota’s (13th and 10th) and Michigan’s (15th and 16th). The only states higher than Wisconsin at both income levels were Idaho, Maine, Maryland, North Carolina and Oregon.

The state’s highest income tax ranking for any group was for married senior citizens with incomes of $50,000. These senior filers paid $1,970 in income taxes, 4th highest nationally. Wisconsin trailed only Oregon ($2,163), Montana ($2,119) and Maryland ($2,108). Oregon’s income tax was among the highest for all filers at all income levels because the state does not have a sales tax and relies heavily on the income tax.

More generally, the study, "Income Taxes by State," showed Wisconsin’s income tax burden on middle-income families was well above average. A married filer with a $35,000 income paid an estimated $1,182 in Wisconsin income taxes in 2003, or 34% more than the average of the 41 states with an income tax. At the $75,000 level, Wisconsin was 12th with an estimated tax of $3,282, or 17% more than average.

Wisconsin income taxes on high-income filers also were generally above the national norm, WISTAX said. For single filers with incomes of $150,000 (16th) and $250,000 (20th), state income taxes here were 7% and 3% above average, respectively. Income taxes for married filers with incomes of $150,000 or more were also above national averages. State income taxes ranked from 15th to 22nd for these persons.

While income taxes were generally high in Wisconsin, the report also found the state’s system to be among the most progressive nationally. A progressive income tax is one where average income tax rates rise with income. According to the study, most of the progressivity in Wisconsin’s income tax comes from generous tax provisions for lower-income filers. Singles with incomes of $35,000 or above paid 5% to 6% of their incomes in taxes. However, at $20,000, that percentage was less than 2.7%, and for filers with incomes of $10,000, the average rate was -6.0% (those filers received, on average, more than $600 in refundable state income tax credits). For married filers, the situation was similar, although the refundable credits were generally larger. At both $10,000 and $20,000, married filers had negative income tax rates.

The WISTAX study provides estimates of income taxes for different types of filers (single, married filing joint, head of household, and senior filing joint) at various income levels for all states with an income tax. The report is the second in a two-part series of studies comparing Wisconsin’s taxes to other states.

This national income tax study and its companion property tax study are available as a set for $145 (sold separately, each is $100). To place an order: write WISTAX, 401 North Lawn Ave., Madison, WI 53704-5033; or phone 608.241.9789. Special pricing is available for WISTAX contributors. The studies were underwritten with a grant from Schenck Business Solutions. o