The plight Illinoisans face under the state’s immense tax
burden is hardly a secret. But a recent study offers a sobering reminder of the
degree to which Illinois’ steep tax bills dwarf those of other states.
A report issued March 13 by WalletHub, a personal finance service, measures the
combined state and local tax burdens of all 50 states and Washington, D.C. The
Land of Lincoln ranked 51st in terms of the severity of its overall tax burden.
Adjusted for cost of living, Illinois’ overall burden placed 43rd out of 51.
According to the study, the effective state and local tax rate on an Illinois
household earning the median U.S. income is 14.89 percent, the highest in the
nation. A household earning the state median income pays $8,330 in taxes
annually, not including federal taxes.
The study reveals a striking disparity between Illinois and other states in the
region. Illinois’ tax burden far eclipses all other Midwestern states. For
example, median households in Wisconsin, the second-most burdened Midwestern
state, pay an annual $7,193 in state and local taxes. But most effective tax
burdens in the region are lower still. Median households in each of Illinois’
neighboring states, with the exception of Wisconsin and Iowa, pay less than
$6,000 annually, meaning the tax burden on median households is at least 39
percent higher in Illinois compared to most of its neighbors.
Taxes included in the study ran the gamut, from income taxes to excise taxes.
But by far the most glaring costs for the Land of Lincoln are Illinois’
punishing property taxes. Illinoisans with a home worth the U.S. median value
pay $4,288 in property taxes annually, according to the study. Isolating the
property tax findings, only New Jersey ranked worse than Illinois.
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WalletHub’s findings mirror those illustrated by a
previous tax study the service conducted in 2017. However, it is
important to note that WalletHub’s analysis utilized data from a
study using Illinois’ now-expired 2011 income tax rate of 5 percent,
rather than Illinois’ current rate of 4.95 percent.
Some lawmakers have floated the idea of amending
the Illinois Constitution to turn the state’s flat income tax into a
progressive tax. But these findings should give Illinoisans pause.
Advocates proclaim a progressive tax would make room for reduced
rates for lower-income taxpayers. But this claim is in conflict with
at least one proposal currently floating through Springfield. The
progressive tax bill authored by state Rep. Robert Martwick,
D-Chicago, would hike taxes on Illinoisans making as little as
$17,300 annually.
Taxpayers have made clear that Illinois’ massive
tax burden has all but pushed them to the brink. This fact is
reflected grimly by the state’s four-year streak of population loss,
which culminated in Illinois falling from fifth- to sixth-largest
state in December 2017, according to U.S. Census Bureau data.
Instead of saddling Illinoisans with higher taxes, lawmakers need to
rein in the growth of government spending at the state and local
levels. State Sen. Tom Cullerton, D-Villa Park, and state Rep. Allen
Skillicorn, R-East Dundee, have both filed constitutional amendments
tying growth in state spending to growth in the state’s economy:
SJRCA 21 and HJRCA 38. And there are many commonsense reforms state
lawmakers could pursue to ease residents’ property tax burdens as
well.
Relieving Illinoisans’ heartache begins with relieving their wallets
from the effects of government overspending.
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