Impact of a 75% Hike: Diminishing Discretionary Income

$500. $720. $1,000. These may seem like small sums compared to your total salary, but the amount a Quinn/Cullerton/Madigan tax hike will carve into your discretionary income is painfully revealing.

by Ashley Muchow

Our Tax Hike Calculator is revealing. Heart-rending even. But what this calculator doesn’t reveal is just how much these sums eat into our personal budgets and discretionary spending.

Let’s take the average Midwestern household for example. According to the Bureau of Labor Statistics, the average annual income of a Midwestern household is $59,908; of this, household’s put $46,551 toward annual expenditures.

Households, on average, spend 48.6 percent of this amount on food, housing, and clothing. This leaves $23,927 in discretionary income for the average Midwestern household.

Let’s run with this number.

Under the Quinn/Cullerton/Madigan tax-hike plan, this household will see a $1,258 increase in their tax bill — that’s on top of the $1,677 they’re already paying. Ouch. Did you know $1,258 trumps the $1,103 the average household spent on education in 2009? Or that $1,258 is almost equal to the $1,461 the average household spent on clothing last year?

These numbers are not just 5.25 percent of income, they cut into the money we use to visit our loved ones, pay electricity bills, the amount that goes to college tuition, extracurriculars for our kids, or a new set of tires for the car.

So where should Illinois households cut? Here’s a breakdown of how the average Midwestern household allocates its disposable income. Where will you cut?

Average Midwest Household Expenditures, 2009

Source: BLS Consumer Expenditure Survey, 2009