By: Ted Dabrowski and John Klingner
Gov. J.B. Pritzker wants you to think Illinois doesn’t tax or spend enough. “A fair tax system will allow us to eliminate the structural deficit that has plagued our state for nearly two decades,” the governor said in his first budget address.
But there’s plenty of data which shows Illinoisans are far from undertaxed. On the contrary, residents face one of the highest combined state/local tax burdens in the country. High taxes is one of the reasons why Illinois is losing more people than every other state in the country, bar New York.
Yet the low-tax myth is consistently repeated by proponents of the progressive tax, especially Ralph Martire, head of the union-backed CTBA. Illinois is a “relatively low tax” state he says, with “one of the 10 lowest combined state and local tax burdens.”
That claim is contradicted by analyses from a Chicago Fed economist to the Tax Foundation to personal-finance firm WalletHub. All show Illinois to be a high tax state once all state and local taxes are added up.
Start with the recent study by the Federal Reserve Bank of Chicago economist Leslie McGranahan. She tracked revenues and expenses for the 50 states since 1960 and found that Illinois had “a relatively larger role of local governments in total state and local finances (and a) higher retiree compensation compared with current worker compensation among its government employees.”
According to her analysis, Illinois has consistently ranked near the top of all states for state and local tax revenues per capita – tracking closely with the 80th percentile (the country’s top 10 states). Illinoisans have been paying more in total taxes than residents in most other states for decades.
McGranahan also found that “Illinois has relatively high local property taxes” – which matches recent data from the nonpartisan Tax Foundation. The foundation said Illinoisans paid the 2nd-highest effective property taxes in the nation in 2017, double the rates that residents in neighboring Missouri, Indiana and Kentucky pay.
Those high property taxes contribute significantly to Illinoisans’ overall state/local tax burden. The Tax Foundation found Illinois had the 5th-highest combined tax burden in 2012, which serves as a good proxy for 2019 due to the similar income tax rate in place back then (5 percent in 2012 vs. 4.95 percent in 2019).
Personal finance management firm WalletHub also ran their own analysis of combined state and local tax burdens.
According to their report, Illinois has the 1st, 3rd or 9th-highest state and local taxes in the nation, depending on the methodology used.
Illinois has already lost a net 1.5 million residents to domestic out-migration since 2000. Telling those who remain that they don’t pay enough in taxes – especially when they already pay some of the highest rates in the country – is a sure way to drive even more people out of Illinois. It doesn’t matter if they are rich or poor.
Losing more people will turbocharge the negative spiral Illinois is in. Already, fewer residents has resulted in a bigger burden on those who remain, lower home values and a worsening business climate. The progressive tax is no solution. It will only make things worse.
Read more about Illinois’ taxation and demographic disaster:
- Illinois’ lethal combination: Rising property taxes and stagnant incomes
- Illinois’ crisis: 20 facts Pritzker doesn’t want ordinary Illinoisans to know
- Pritzker’s progressive tax push: A guide for the ordinary Illinoisan
- Illinois’ demographic collapse: fewer immigrants, fewer babies and fleeing residents
- Leaving Illinois: One family’s math