As the nation passes the annual ordeal of filling out and sending in the income tax form, is there anything more taxing than taxes?
In Illinois, well, no, there isn't.
A study by Wallethub, a nonpartisan group of accounting professors, finds that Illinois is the worst state in the nation to be a taxpayer.
Based on the national average income, a household in Illinois would pay a $7,719 in combined state and local taxes a year. The Illinois bite comes on top of the average $17,000 households pay to the federal government. Illinois is 37 percent above the national average and the highest state by a big margin, $422 more per year than Nebraska, which is second. Wisconsin was third at a bite of $7,159 per household.
And if you wonder why nearby Indiana is prospering, the average family can give themselves a $1,500 annual savings by moving across the state's eastern border. Hello, Hoosiers.
The study combines both state and local taxes. It also adds four taxes together: the property tax, the vehicle property tax, income taxes and sales taxes.
Now Illinois does not have a vehicle property tax. Our income and sales taxes are worse than average, but not way out of line. The Illinois income tax has the 20th highest bite in the nation. Our sales tax is the 23rd highest. The property tax is the killer, with an Illinois household at the average national income paying $3,939 per year. That's the highest in the nation.
The key to reducing this, of course, is to find more ways to combine and streamline local government services. Illinois taxpayers support more local governments than in any other state.
The Wallethub study has its critics because it takes the national average income and sees how that average family would fare in each state. However, not all the states are average.
But here's the fascinating thing. The state government now is wrestling with what it can afford. How does one find money for essential services? The easy thing to say (and to gain the most votes) is to say let's go tax the rich. The problem is that there are not enough rich to tax. And when you make people who can move uncomfortable, they have a nasty habit of moving away.
The Wallethub folks then broke down each state's tax burden and how it hits the rich, poor and middle class. Illinois is the 44th worst state to be rich. No break for the wealthy. But it's even worse to be poor here. Illinois is the 49th worst state to be poor in. But it's the absolute worst, 50th place, to be a member of the middle class. Middle class households in Illinois contribute 11.3 percent of their income to state and local taxes.
Everyone is aware of the property tax because it is paid in one lump sum, but other taxes, notably the sales tax, contribute to the amount paid. They just aren't noticed, but they are sure drains on the economy.
Many times, public discussions on tax policy focus on one particular tax or another. The property tax is too high, etc. Let's try a sales tax and see if the public will buy it.
The upshot of the overall study, perhaps, gives data to what many already suspect, that Illinois is not very competitive when it comes to the overall tax burden. We are paying too much. A secondary almost as important problem, is the reality that the burden is really not he backs of the middle class.
Coming up with a better tax policy will not be easy. This much is clear — Illinois must change.