Vote For Democrats to Make Our Tax System Fairer

Wisconsin's Homeowners Bear a Heavy Property Tax Load

Understanding how the election could affect your property taxes should help you to decide whom to vote for.  Wisconsin’s local governments depend more heavily than those other states on the residential property tax. The reasons for that dependence are complex, but two of them stand out, and they are both things that we can change if we want to. This post is a little wonky, but bear with me. 

Business Property is Undertaxed in Wisconsin

First, residential property bears a disproportionate share of the cost of our local governments because business property does not pay its fair share. Our state’s constitution requires all properties to be taxed at the same rate For example, business properties are taxed at the same rate as residential properties even though business properties produce profits for their owners even when they do not sell the properties. This means that in reality, the value of a business property is not determined solely by its potential sale price, while the value of a residential property is determined by its potential sale price alone. As a result, business properties are undertaxed while residential properties are overtaxed.

Many states deal with this difference by creating different classes of properties for tax purposes, and the rates may differ among classes. Properties may be classified as residential, commercial, agricultural or manufacturing properties. Properties within a class are all taxed at the same rate, but rates may differ between classes. This allows business properties to bear a fair share of the cost of local government. Wisconsin's constitution as interpreted by the state's courts does not allow us to tax different classes of properties at different rates, but we could change that by amending our constitution.

Walker's Tax Cuts Reduced State Aid for Local Governments

The local property tax rate is also affected by the levels of other taxes. In Wisconsin, localities receive funds from Madison, which collects income taxes. The expenses of local government are covered in part by the funds received from Madison, and the rest must be paid by local taxes. Local governing bodies (city councils, school boards etc.) determine the amount of money that needs to be raised through the property tax, and the tax rate is set at the level that allows the needed money to be raised.

The amount that the state can send to local governments depends on the amount that it can collect in income taxes. In effect, the more the state collects through the income tax, the less the localities need to raise through the property tax. Under Gov. Walker, the income taxes paid by our richest residents were reduced, and the reductions in the income tax led to a reduction I the amount that Madison could send to local governments and therefore increased the latter’s dependence on the property tax. Thus, the tax burden was shifted from the very rich (earners of very high incomes) to ordinary homeowners. We could change this situation by repealing Walker's income tax cuts.

We Can Make Our Tax System Fairer

So, if you think that your property tax is too high, you should consider voting for candidates who might change the things that are causing it to be so high. If we elected Democrats, we could amend our state’s constitution to allow the creation of different classes of properties, and we could repeal Walker’s income tax cuts. So, if you think you are paying too much in property tax, you should consider electing Democrats who would consider enacting changes to lighten your property tax burden.