Oh, the places they’ll go: The impact of Pritzker’s progressive tax on wealthy Illinoisans
You have to wonder if Gov. J.B. Pritzker ever saw the top marginal tax rates of other states before he released his new progressive tax plan. If he gets his way, he’ll give wealthy Illinoisans another big reason to leave the state. […]
His new tax hike will be just another huge incentive for the wealthy to take up residence elsewhere. They’ll get a far better deal on their income taxes if they do. […]
Pritzker says Illinois is an outlier because it remains a flat tax state even though 30-plus other states have a progressive tax structure. But with his tax plan, Illinois will become an outlier among progressive tax states for how much it taxes residents with $250,000 incomes and above.
North Dakota, Arizona, New Mexico, Ohio, Alabama, Mississippi, Oklahoma, Kansas, Maryland, Virginia, Missouri, Rhode Island, Georgia, Louisiana, West Virginia, Iowa (by 2023), Delaware, Nebraska, Arkansas, Montana, Connecticut, South Carolina, Maine, Idaho and Wisconsin all have progressive structures with lower tax rates on $250,000-plus incomes compared to Illinois under the Pritzker plan.
Even New Jersey and New York’s rates, which are some of the highest in the nation, would be less painful for residents earning $250,000 to $500,000 ($250,000 to $1 million in New York’s case).
* OK, so I used the Tribune’s new online calculator for Pritzker’s proposed graduated tax (as I mentioned earlier today, the Trib tells you what you will owe, while the governor’s calculator only tells you how much less or more you’d pay) and plugged in an income of $251,000 for a single person with no exemptions and got $12,387 in income taxes owed, not including the increased property tax credit.
Next, I used the SmartAsset.com calculator and plugged in that same $251,000 income for the states listed above (excluding Iowa).
States with significantly lower effective graduated rates…
North Dakota: $5,047
States with somewhat lower effective graduated rates…
New Mexico: $11,510
Rhode Island: $11,896
* The rest…
New Jersey: $13,799
West Virginia: $15,060
Ohio: $9,842 (plus $5,499 in local income tax for Cincinnati)
South Carolina: $16,330
Maryland: $12,705 (plus $6,374 local income tax for Annapolis)
New York: $15,536 (plus $9,294 in local income tax for NYC)
As far as flat tax states go, if you live in North Carolina, your tax bill would be $13,321 (higher than Illinois). In Frankfort, Kentucky, your effective income tax would be $12,424 (higher than Illinois) plus another $7,405 in local income taxes. If you live in Detroit, Michigan, you’d pay $10,495 and then another $6,010 in local income taxes. In Utah, your income tax bill would be $12,425 (higher than Illinois). In Massachusetts, it’s $12,577 (higher than Illinois). Indianapolis residents pay $8,075 state income tax and $4,050 local income tax. Philadelphia, PA residents pay $7,706 to the state and $9,849 to Philly. Coloradans pay $11,621 (about $800 less than they’ll pay here if this passes muster).
* Now, you could plug in higher incomes and you might get some different results, but I didn’t set the parameters of this “debate,” they did. Also, I’m done crunching numbers for a bit.
Point being, nobody who bases any sort of intelligent decision on whether to move is gonna look at marginal tax rates. And, frankly, most people don’t move based on this topic in the first place. Click here for just one example.