By Kurt R. Bauer
Wisconsinites are competitive. Whether it’s our sports teams or economic rankings, we don’t settle for mediocrity. We expect to be national leaders. But sadly, as it relates to critical economic indicators, Wisconsin is falling behind.
That assessment is well documented in the newly released Wisconsin Competitiveness Report published by the WMC Foundation, an affiliate of Wisconsin Manufacturers & Commerce (WMC). The report clearly shows that Wisconsin is not where we need to be on the metrics that matter, like taxation, workforce, education, regulations, and healthcare affordability.
As a state, we should be rolling out the red carpet to attract business investment and talent. Instead, we are entangling businesses in red tape and burdening them with higher costs.
The report includes multiple examples, starting with the fact that Wisconsin has the 12th highest corporate tax rate in the nation (7.9 percent), the 8th highest property taxes and the 9th highest individual income tax rate (7.65 percent). All of the above are uncompetitive, especially when you consider that just last year, nine states lowered their personal income taxes.
The good news is there have been attempts to lower the personal income tax, which is important to businesses because 95 percent of them file as pass-through entities. The bad news is that effort failed thanks to Governor Tony Evers’ veto pen. The even worse news is that Governor Evers proposed $3 billion in new taxes in his last budget, including a higher personal income tax rate of 9.8 percent and a $792 million tax on manufacturing, Wisconsin’s largest economic sector.
When you tax something, you get less of it — in this case, reduced business investment and fewer people, including workers, consumers and taxpayers. Wisconsin can’t afford that. Between April 2020 and July 2023, approximately 2.8 million people migrated out of high tax states, like California, Illinois and New York, in favor of more affordable states with lower taxes, like Florida, Tennessee and Texas.
Wisconsin has remained below replacement-level fertility since 1974, which means our state desperately needs more people. In response, we should learn from the case study mentioned above and use our tax rates as a way to lure people in, not to chase them away. Not doing so has consequences that will reverberate throughout the state. We will lose jobs because there won’t be workers to replace retiring Baby Boomers. Schools, colleges and universities will continue to lose students. Heck, we will even lose between 100,000 to 190,000 deer hunters through 2040, according to a recent report.
All of that and more has a negative economic impact. But the demographic challenge will weaken Wisconsin’s political influence as well if, as expected, we lose a congressional seat after the 2030 Census.
The Wisconsin Competitiveness Report also shows the return on our K–12 investment is severely falling short of expectations. Per pupil spending has increased 107 percent between 1999 and 2024. During that same period, overall K-12 support went from $4.7 billion to $8.2 billion, a 74 percent increase. But 60.5 percent of 4th and 8th graders are below grade level in math, while 69 percent are below grade level in reading. That is not just unacceptable; it’s a scandal.
If I haven’t already depressed you, let me add that Wisconsin is the 13th most regulated state, according to the Mercatus Center, and we have the highest cost in the nation for medical payments for Workers’ Compensation and the 4th highest overall hospital prices.
The WMC Foundation report should be a wake-up call for business leaders and policymakers alike. Wisconsin has to do better.
