State Policy Network
State spotlight: Fighting for income tax relief in Wisconsin

In politics—as in life—bold results require bold actions. When the Institute for Reforming Government (IRG) set out to fundamentally improve Wisconsin’s economic outlook, they knew small fixes and marginal reforms wouldn’t do enough. As IRG president CJ Szafir put it, “With a budget surplus of over $6 billion—unprecedented for Wisconsin—the timing is right to work with both sides to enact tax reform that can expand opportunity and prosperity for Wisconsinites.”

So IRG embarked on a multi-year plan to enact one of the boldest reforms ever proposed in the Badger State—eliminating Wisconsin’s state income tax.

Wisconsin’s income tax problem and the policy solution

Wisconsin’s top income tax rate of 7.65% is one of the country’s 10 highest. IRG explained the impact as inefficient, “The progressive state income tax compounds the distortions from the federal income tax, leading to total marginal tax rates of nearly 48% for some households.” But it’s not just the wealthy being pinched by Wisconsin’s high tax rates; middle-class families pay a higher percentage (as high as 9.8%) of their wages in taxes than the state’s highest earners.

In other words, Wisconsin’s high taxes are an anchor weighing down the state’s economy. But that’s the anchor IRG is working to eliminate.

IRG’s first step was gathering the right data on the problem. In December 2021, IRG worked with Economics Professor Noah Williams at the University of Wisconsin-Madison’s Center for Research On the Wisconsin Economy (CROWE) to release the report “Fundamental State Tax Reform: Eliminating the Income Tax in Wisconsin.” This thorough report showed the economic damage from Wisconsin’s high-income tax system. It also showed how eliminating the individual income tax while increasing the state sales tax would bring jobs to the state, increase Wisconsin’s competitiveness, and save the average Wisconsin household $1,700 a year.

But a whitepaper just collects dust without a campaign for action, so IRG started building a coalition around eliminating Wisconsin’s individual income tax.

Within a month, IRG had garnered the support of some of the nation’s leading authorities on free market tax and budget policy. Their coalition included Americans for Prosperity, Wisconsin Manufacturers and Commerce (Wisconsin’s state chamber of commerce), ALEC, Americans for Tax Reform, Stephen Moore, Reince Priebus, and National Taxpayers Union. All the members of IRG’s coalition gave interviews, made statements, and spoke publicly about the strength of IRG’s proposal. For example, IRG’s press release announcing the new campaign and proposal quoted Grover Norquist as saying, “Doing away with the state income tax would make Wisconsin more economically competitive both nationally and globally.”

Equipped with the right research and backed by a significant coalition, IRG then set out to gauge the public’s opinion on the proposal and develop the perfect messaging. In January 2022, polling results showed that once voters understood the full plan and how it would be implemented with existing sales tax exemptions on items like groceries and prescriptions drugs, 41% of voters supported the proposal while only 28% opposed the idea. There is still work to do to win voters’ support, but it’s clear that Wisconsinites are ready for change.

Making progress towards change

IRG’s team knew that eliminating Wisconsin’s individual income tax would require grassroots support. And In Wisconsin, the best way to build grassroots support is on conservative talk radio.

IRG enlisted former Governor Scott Walker and Grover Norquist along with CJ Szafir to tout the income tax campaign on some of the state’s leading conservative talk radio shows. The strategy paid off. Influential grassroots voices in Wisconsin like WISN radio’s Jay Weber gave their support to the proposal.

In addition to the radio campaign, IRG’s team also went on a statewide tour to talk with small business owners and leaders of Wisconsin’s business community about the income tax proposal. After hearing how eliminating the state’s individual income tax would improve the lives of Wisconsin workers and business owners alike, many of the workers, executives, and business owners that IRG met with threw their full support behind the proposal.

Finally, equipped with their data, resources, and grassroots coalition, IRG’s team met with key state lawmakers to begin the first real conversation about eliminating Wisconsin’s income tax.  Because of these meetings, IRG received support from a number of state lawmakers, including the Senate President, and no opposition from leadership.  Those efforts helped State Senator Roger Roth introduce a bill eliminating the state’s individual income tax. While the bill didn’t pass, the fact that it was introduced and debated—along with all the additional aspects of IRG’s campaign—set the stage for important (and bold) victories in 2023. 

“It’s incredibly rewarding to see our plan to eliminate Wisconsin’s income tax embraced by leading gubernatorial candidates, state lawmakers, and conservative opinion makers,” said Szafir. “In the last year, the IRG team has taken a policy proposal—long discussed in Wisconsin but never acted upon—and made it mainstream in the Wisconsin conservative movement.” 

Policy Issues: Tax Reform
States: Wisconsin
Organization: State Policy Network
Professional Topics: Strategy