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20 Journal of Policy History 94 (2008)


In 1911, Wisconsin became one of the first U.S. states to adopt an effectively administered income tax. Wisconsin reformers were able to overcome several institutional barriers to create the administrative capacity necessary to assess and collect a graduated income tax that in time raised significant revenue, but did not supplant the property tax. With this limited success, the Wisconsin income tax soon became a model for other states and even the national government. In this sense, Wisconsin was a leader in forging fiscal reform. Political activists, lawmakers, and other government actors in the Badger State led a turn-of-the-century property tax revolt when they sought to replace the aging, locally administered general property tax with a graduated income tax managed by a centralized, administrative bureaucracy.

This essay investigates how and why Wisconsin tax reformers were able to help build the administrative capacity to levy new forms of taxation but were unable to replace the property tax completely with a progressive tax on income. By confronting the entrenched power of political parties, state constitutional constraints, and cultural resistance to centralized authority, activists and lawmakers established an institutional beachhead for the subsequent development of a new fiscal order. The administrative reforms enacted as part of the 1911 income tax law dramatically changed the way Wisconsin managed the assessment and collection of taxes. The building of administrative capacity was thus a critical step in addressing the fiscal challenges of the time, in forging a new sense of fiscal citizenship, and in laying the foundation for the subsequent growth of the public sector.