Illinois has highest overall tax burden in the nation

March 15, 2017
By Brendan Bakala

A new report from WalletHub finds Illinois’ combined state and local tax burden is higher than that of every other state and the District of Columbia.

A March 14 report has found that Illinois has the costliest state and local tax burden in the country. Statewide, the median Illinois household pays $8,162 in annual state and local taxes, including sales taxes, property taxes and income taxes.

WalletHub, a personal finance website, released its annual ranking of states’ tax burdens. The report combines statewide taxes with local taxes to create an overall effective state and local tax rate for the median household in each state.

Illinois was ranked the worst in the nation, with state and local governments effectively taxing median households at 14.76 percent. WalletHub used several taxes to calculate Illinois’ percentage; however, the most damning was the property tax. Illinois ranked second-worst in the nation for property taxes. People in homes with the U.S. median home value pay $4,105 annually in Illinois, according to WalletHub. Illinois’ crushing property taxes combined with income and sales taxes make the Prairie State the most taxed in the country. 

And high taxes are driving Illinoisans to the border. From 2006 to 2015, a net 700,000 people migrated out of Illinois. Polling by the Paul Simon Public Policy Institute showed 47 percent of Illinoisans want to leave the state, and the single biggest reason is Illinois’ high tax burden. 

Some state politicians want to make this tax burden even worse.

The Illinois Senate is currently negotiating its so-called “grand bargain” budget deal, which includes billions of dollars in tax hikes for Illinoisans. Among the Senate’s ideas: a permanent 33 percent income tax hike, implementing a tax on sugary beverages, raising taxes on food and drugs, and expanding the sales tax to include previously exempt services.

And in exchange for raising and implementing a slew of taxes, the Senate is offering a mere two-year property tax freeze with exceptions for costs related to debt service, pension payments and public safety ̶ some of the biggest cost drivers of property taxes. The short-lived freeze does nothing to curb local cost drivers, such as collective bargaining and expensive state mandates, and would not be enough to give relief to overburdened Illinois homeowners.

The “grand bargain” also calls for more than $200 million annually to go to the Chicago Public Schools teachers’ pension fund, despite the fact that Chicago students receive more state funding than the average Illinois student.

These proposals are out of touch with what Illinoisans want. Polling commissioned by the Illinois Policy Institute reveals a majority of Illinoisans want a budget without tax hikes. Another poll conducted by Anzalone Liszt Grove Research shows 66 percent of Illinoisans are opposed to income tax hikes.

Senators considering the “grand bargain” should realize their constituents already have the highest tax burden in the nation and shouldn’t have to cough up more. Illinois lawmakers should embrace real reform by going after the cost drivers that are bankrupting the state and implementing a five-year property tax freeze to give Illinois families some much-needed relief. Without real reform, Illinois households will continue to pay more for the same services.

TAGS: income tax, property taxes, taxes