Source: Forbes
Badger State voters are gearing up for one of the most critical elections in the state’s recent history. The stakes are high and the polling margins are wafer-thin in a dead heat battle between incumbent Governor Scott Walker and Democratic candidate Mary Burke.
Before heading to the polls this November, Wisconsin voters should seriously consider the facts presented in a new study by the National Center for Policy Analysis (NCPA) and the John K. MacIver Institute for Public Policy (MacIver). The paper, “Is the Tax Code Driving Taxpayers from Wisconsin? An Analysis of Wisconsin Taxes,” praises Governor Walker’s leadership on overall state tax reform. Most notably, along with the state legislature, Walker returned nearly $2 billion in taxes to the private sector, rejected 17 special-interest tax credits, and decreased the number of income tax brackets from five to four.
But, the study points out, there is much more to be done if Wisconsin is to turn the tide on its average annual loss of more than $136 million in adjusted gross income from people choosing to move out of the state. When it comes to wealth migration between the states, it has been irrefutably documented that taxes matter. (Supporting the data provided by NCPA/MacIver is the expanded data provided by www.HowMoneyWalks.com and An Inquiry Into the Nature and Causes of the Wealth of States (a book that I co-authored).
Of course, opponents of state tax reform often point out other considerations that factor into a person’s choice to move, especially climate. No doubt, the record-breaking, below-freezing weather that much of the Midwest experienced last winter has even the hardiest among us searching Zillow for that perfect Naples cottage. (Understandably, in January it is hard to compete with Naples average daily temperature of 76 degrees compared to 26 degrees in Madison.) But one cannot deny that complementing Wisconsinites’ warm-weather fantasies would have to be Florida’s attractive incomes and property tax policies.
According to NCPA/MacIver:
“Wisconsinites are moving to Florida for more than just the warm weather. Florida’s taxpayers do not pay a state income tax, and the average property tax rate is almost half of Wisconsin’s. That means over the period of a lifetime, taxpayers could stand to gain hundreds of thousands of dollars in AGI just by heading to the Sunshine State.
According to the NCPA’s State Tax Calculator, the analysis tool used in this study, a 40-year-old married couple who owns a home and earns $75,000 a year would gain $223,735 over the rest of their lifetime if they moved to Florida from Wisconsin.”
It should not be surprising that in the past 18 years, $2.4 billion in adjusted gross income has fled Wisconsin for the warm weather and low-tax policy climate of the Sunshine State.
Even more impressive data comes from comparing Wisconsin’s middle-class and high wage earner tax rates to Minnesota, Illinois, and Iowa – all states that suffered through the same ice and snow storms that devastated many local economies.
In short, the NCPA/MacIver study shows that many of those who contribute the most to Wisconsin’s tax base – married homeowners earning $75,000 – $100,000 a year – would fare far better financially in neighboring states. The exception is Illinois, where Governor Pat Quinn’s destructive tax policies would mean tens of thousands of dollars of discretionary income loss over a lifetime.
According to the study:
As reported here, the tax policy plans of Governor Walker and candidate Burke have “crucial differences.” If Walker is successful, he states that he will continue to lower the overall tax burden for all taxpayers each year. Whereas Burke’s focus is limited to reducing only middle-class property taxes.
In the last few years, Wisconsin has set itself on a pro-growth fiscal track by reducing and simplifying its tax burden for all workers. There is much at risk come November. If Walker loses, then Wisconsin may also lose many of the state’s most successful earners and the billions of dollars they would contribute to the state’s economy.