Cutting the Home Budget to Pay for Higher Taxes

Cost of tax hike equivalent to average Illinois paycheck ­– gone.

Download the full report here.

The tax increases signed into law this month by Illinois Gov. Pat Quinn will cost most Illinois households $1,000 ? equivalent to one or more weeks? pay.

How many families can afford to miss a paycheck?

According to the U.S. Census Bureau, the average family living in the Midwest earns just under $60,000 annually and consists of 2.4 people. In Illinois, that family will pay $1,100 more each year in state income taxes ? nearly as much as they spent on clothes last year. Where will Illinois families find the room to cut their budgets?

The chart below breaks out spending by the average midwest family by category, using data from the Bureau of Labor Statistics. The tax increases faced by the average Illinois family is equal to two months of groceries and food, or one month?s housing costs. State lawmakers are forcing Illinois families to cut back, but will Springfield show spending restraint as well? (A matrix showing how much more each family will pay in taxes is further below)

How Much Will Your Family Pay??The projections below are based on a 67 percent increase to the income tax ? which took the state tax rate to 5 percent, up from 3 percent. This graphic takes into account the standard deduction of $2,000 per person.

The Bottom Line?The tax hikes of 2011 should be rolled back as soon as possible. In order to do so, lawmakers must make deep and sustained cuts to state spending. Every dollar spent by state government is a dollar taken from working families. The longer that tax hikes remain in place is the longer those families must go without many of the things they were already struggling to afford.

Download the full report here.