The Sconi

On September 19, 2024, an analysis of Wisconsin's government spending compared to other states revealed mixed findings. The comparison focused on both state-level and combined state and local expenditures.

According to data from the Urban Institute & Brookings Institution Tax Policy Center, Wisconsin's per capita state direct general expenditure in 2021 was $5,149, placing it 31st in the nation. The national average was $5,336. This figure is also slightly less than the average for Great Lakes states (Illinois, Indiana, Michigan, Minnesota, and Ohio), which stood at $5,158.

Among the eight states without an income tax, Wisconsin's state government spends less than Alaska, Wyoming, and South Dakota but more than the other five. The average expenditure for all states without an income tax is $5,639. Excluding Alaska and Wyoming as outliers reduces this average to $4,415; these two states spend an average of $9,922.

When considering combined state and local government spending—a method that accounts for variations in whether services are funded at the state or local level—Wisconsin again spends below the national average. In 2021, the U.S. average for combined expenditures was $11,087 per capita while Wisconsin spent $10,340. For Great Lakes states combined spending averaged $10,527.

For states without income taxes combined spending averages $11,123 per capita compared to Wisconsin's $10,340. Only Alaska and Wyoming spend more in this category with an average of $17,947. States like South Dakota and New Hampshire spend less on a combined basis with an average of $9,173.

Wyatt Eichholz of the Badger Institute noted that examining per-capita figures helps compare different-sized states' expenditures but also emphasized looking at overall spending levels if Wisconsin matched other states' per-capita rates.

In terms of total expenditures in 2021:

- Wisconsin’s direct general expenditure was approximately $30.28 billion.

- Matching the U.S. average would have raised this to about $31.4 billion.

- Spending at the Great Lakes average would have resulted in approximately $30.33 billion.

- Matching zero-income-tax-state averages (excluding Alaska and Wyoming) would have reduced it to about $25.2 billion.

Considering combined state and local expenditures:

- Wisconsin spent approximately $60.8 billion.

- At the national per-capita rate this would rise to about $65.2 billion.

- Spending at Great Lakes averages would increase it to roughly $61.9 billion.

- Matching zero-income-tax-state averages (excluding Alaska and Wyoming) would reduce it to around $53.9 billion.

Eichholz holds a master's degree in economics from the University of Alabama and serves as Policy and Legislative Associate at the Badger Institute.

For permissions related to reproducing Badger Institute content or photographs contact President Mike Nichols at mike@badgerinstitute.org or 262-389-8239.

This essay is adapted from a recent policy brief by the Badger Institute on eliminating Wisconsin’s income tax.