Waukesha Times

A significant migration trend is unfolding as hundreds of Wisconsin residents relocate to states with lower tax rates in search of better economic opportunities. Recent data underscores a substantial influx of Wisconsin residents moving to Florida, enticed by the state's relatively lower tax environment and promising economic prospects.

The Badger Institute indicates that recent IRS data from 2020 to 2021 unveils Wisconsin's migration patterns, demonstrating a correlation: states with higher top tax rates than Wisconsin tend to lose adjusted gross income (AGI) to Wisconsin, while states with lower rates attract income from Wisconsin residents.

The Badger Institute further reveals that data indicates Wisconsin experienced notable net losses in both taxpayers and AGI to states like Florida, Texas, Arizona, and Nevada. These states either have no state income tax or lower income tax rates compared to Wisconsin's 7.65%. On the other hand, Wisconsin gained both taxpayers and significant AGI from Illinois, Minnesota, and California despite their relatively higher tax rates.

In a study referenced by the Badger Institute, economist Don Bruce from the University of Tennessee suggests considerable economic gains for Wisconsin if the state transitions to a flat individual income tax. Transitioning from the current progressive system—with a top rate of 7.65%—to a proposed 5.1% flat-rate tax could potentially generate approximately $7.2 billion in added GDP, $614 million in new investments, and nearly 24,000 additional jobs over the next five years.

According to CBS News, the Republican-led Wisconsin Legislature passed a $2 billion income tax cut in November which Democratic Governor Tony Evers vetoed.

The Tax Foundation outlines that in Wisconsin, the tax landscape includes a graduated individual income tax with rates reaching up to 7.65 percent; corporations face a flat 7.90 percent income tax rate. For sales tax, the state imposes a 5.00 percent rate with local taxes reaching a maximum of 1.75 percent, resulting in an average combined state and local sales tax rate of 5.43 percent. According to the 2023 State Business Tax Climate Index, Wisconsin's tax system ranks 27th overall.