This post originally appeared at https://www.badgerinstitute.org/study-a-flat-rate-income-tax-would-spur-growth-and-opportunity/

Tax reform can have substantial benefits for Wisconsinites’ economic prospects

Author Don Bruce, a prominent economist at the University of Tennessee, estimates moving to a flat individual income tax in Wisconsin could generate nearly $7.2 billion in additional GDP, $614 million in new investment, and nearly 24,000 additional jobs over the next five years.

Wisconsin has long had one of the country’s most progressive individual income taxes, with a top rate of 7.65% that is the eighth highest in the nation. Bruce’s report explores the economic impact of moving to a 5.1 percent flat-rate tax.

Approximately 95% of Wisconsin businesses are pass-through entities that pay the individual income tax rates. A shift to a flat-rate individual income tax would, therefore, also result in a meaningful tax reduction for many businesses, which then should result in lower price growth, higher wage growth, more employment and higher shareholder value.

Bruce’s findings are substantial impacts, especially in light of Wisconsin’s slow to negative projected growth in the next two years. As such, his figures are lower-bound estimates that would certainly be even larger in more robust economic times.

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