Wisconsin Taxes on Business are Below the National Average

Monday, August 15, 2011 at 10:05 PM by

A corporate-funded study shows that Wisconsin businesses pay less in taxes than the national average. Tax paid by Wisconsin businesses – including income tax, property tax, and sales tax – made up 4.6 percent of the gross state product, compared to the national average of 5.0 percent.

Among the states, Wisconsin was tied for 19th lowest in the share of business tax of the state’s GSP, with businesses in 18 other states paying less in total state and local taxes. In fiscal year 2010, Wisconsin businesses paid $10.0 billion in tax at the state and local levels.

This study takes an inclusive look at the tax that Wisconsin businesses pay. That’s helpful, because the corporate income tax makes up only a very small portion of the tax paid by businesses. In Wisconsin, the property tax and the sales tax together make up nearly two-thirds of the tax paid by Wisconsin businesses, as shown in the chart below.

This study is authored by Ernst & Young in conjunction with the Council on State Taxes, a trade association made up of major corporations. This same group recently ranked Wisconsin as having the 4th lowest tax rate on business making new investments. (See our April 27th blog post on this topic.)

Businesses weigh many factors when deciding where to locate, with taxes playing a relatively small role. Nevertheless, it’s interesting to note that evidence shows that Wisconsin businesses pay lower taxes than in most other states – despite rhetoric from some policymakers to the contrary.

Tamarine Cornelius

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