* Institute on Taxation and Economic Policy…

ITEP’s newest edition of Who Pays? helps to reveal that many states traditionally considered to be “low-tax states” are actually high-tax for their poorest residents. The “low tax” label is typically assigned to states that either lack a personal income tax or that collect a comparatively low amount of tax revenue overall. But a focus on these measures can cause lawmakers to overlook the fact that state tax systems impact different taxpayers in very different ways, and that low-income taxpayers in particular often do not experience these states as being even remotely “low tax.”

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31 Comments - Blue Dog - Friday, Jun 4, 21 @ 4:00 am: Indeed. Indeed. Property tax. Gas tax. Sales tax. Not to mention fees for things like liscence plates. Transfer fees. Wake up folks. - Anyone Remember - Friday, Jun 4, 21 @ 4:18 am: At first glance, these are states with no / low income tax rates. - Miso - Friday, Jun 4, 21 @ 5:55 am: I’d note that there’s a robust grey market weed distribution network in my neighborhood. My dispensary is in the Westside of Chicago, and people from the area don’t shop there. They can’t. Taxes are insane. So they text the delivery guy and get their smoke that way. It’s not nearly as good as the dispensary stuff and no one can say if it’s unadulterated or not. I read a lot about vax hesitation in the community. Let me tell you, med card hesitation is real. “I’m not going on a police list” is a real fear over here. I’m not directly on point here Bc the poor folks aren’t paying this tax (some are obviously) but an old white dude like myself is not an effective messenger to help folks get over the med card hesitation. I don’t know conceptually how to frame a sliding scale weed tax for the poor, but it really seems unfair to me that they as a group, have to settle for ditch weed Bc the taxes are so robust. /rant - Mary - Friday, Jun 4, 21 @ 6:54 am: Now measure that against the value of government benefits received at the lower percentage vs upper percentage. - Grandson of Man - Friday, Jun 4, 21 @ 7:31 am: Illinois voters made it very clear that they want to protect the richest at their own expense. One can criticize the Fair Tax campaign, but it did tell us over and over that the vast majority would get a tax cut. We did judo on ourselves, flipping ourselves for fear of giving more of our money to Springfield politicians under a graduated income tax, when we are paying a higher income tax now. - Al - Friday, Jun 4, 21 @ 7:53 am: Washington State has the highest liquor tax. It is four times the Illinois rate. I do not disagree with taxing those 200 ml bottles of Canadian Dry Whiskey; good economics. If we taxed whiskey in a similar fashion we would have an extra $500 million in the GRF. That will not pay off all our bills but it is not pocket change. Who knows, maybe higher liquor taxes might reduce the demand for some government funded services? - Techie - Friday, Jun 4, 21 @ 8:15 am: People are often dumbfounded when I point out what the actual tax rates are in other states compared with “high-tax” Illinois. For instance, someone earning $50,000 per year would pay more in income taxes in any other neighboring state except Indiana. But marketing, even if it’s a lie, is effective. The constant drumbeat of right-wingers droning on that Illinois has such high taxes has worked, even though it’s not especially true. This is probably in part because property taxes in particular are pretty high in IL, even though other taxes are not especially high. - Al - Friday, Jun 4, 21 @ 8:17 am: Dear Miso, The high prices at the dispensaries is not due to high taxes. It is by design a small number of well represented individuals have created an integrated internal to Illinois Cannabis growing and distribution effective monopoly which does not begin to try to compete with the black market on price. Looking forward to the Department of Agriculture’s first annual report on Cannabis Crop, so we can know how many acres are planted and the value of the yield. - froganon - Friday, Jun 4, 21 @ 8:20 am: Washington State also has a very robust set of licensing and certification fees for every conceivable service job. Wait staff, bartenders, bouncers, hair stylists all pay training and certification fees in the hundreds of dollars range for periodic licenses/renewals. Boeing is rumored to be the heavy hitter opposing a graduated income tax there. Just like Illinois, no graduated income tax means poor people shoulder a disproportionate share of public costs. - Dysfunction Junction - Friday, Jun 4, 21 @ 8:38 am: “But a flat tax is more fair by definition, right?” /S - Moved East - Friday, Jun 4, 21 @ 9:30 am: I think the variety of States listed in the chart with their variety of tax structures demonstrates what I have thought all along, high taxes decrease revenue and hurt the poor. Low taxes decrease revenue and hurt the poor. There is a tax “sweet spot” each state should find. - City Zen - Friday, Jun 4, 21 @ 9:37 am: ==Property tax. Gas tax. Sales tax.== Yep. Only 1.5% of that 14.4% effective tax rate for the Poorest 20% is income tax. - Dysfunction Junction - Friday, Jun 4, 21 @ 9:41 am: ==Only 1.5% of that 14.4% effective tax rate for the Poorest 20% is income tax.== Your point? - H-W - Friday, Jun 4, 21 @ 9:54 am: =Property tax. Gas tax. Sales tax. Not to mention fees for things like liscence plates. Transfer fees. = The poorest among us are renters, not owners. Property taxes and transfer fees, do not explain this unequal burden upon the poor. The relatively higher flat taxes on essential goods (food, gas, clothings, utilities, etc.) do. For lower income and poor people, every penny spent it taxed at the higher rates. - Grandson of Man - Friday, Jun 4, 21 @ 9:57 am: “high-tax for their poorest residents” Regressive taxes hitting the poorest the hardest is what Griffin and right wing big biz interests want—offloading the burden of collective responsibility onto those who can least afford it. And they call others socialists? - City Zen - Friday, Jun 4, 21 @ 9:58 am: ==Your point?== You could eliminate state income taxes entirely for the working poor in Illinois right now and they’d still have one of the highest tax burdens in the country. Unless income tax reform is accompanied with substantial reforms to both sales and property taxes, the tax burden for both the lower and middle classes in Illinois will remain high. - Anyone Remember - Friday, Jun 4, 21 @ 10:12 am: Washington State, not having an income tax, all other taxes are sky high. Had an extended family member in in the military stationed just outside Spokane. The City of Spokane had a 16% tax on all utility bills. The State Patrol vehicles had a special computer program to record and store data on out of state vehicles, which was designed to catch locals who registered their vehicles in Idaho. (S)he said the list of such things was quite impressive, and depressing. - Dysfunction Junction - Friday, Jun 4, 21 @ 10:15 am: Thanks for the clarification, Zen. Good point. IIRC, lessening reliance on property (and other taxes not linked to socioeconomic status) was part of the failed Fair Tax proposal. It seems the majority of Illinoisans prefer the status quo. Or they didn’t understand the point of the Fair Tax proposal. For what it’s worth, I got to experience the “low tax state life” during a brief visit to Texas this spring. They apparently prefer to finance roads with user fees, aka toll roads, rather than general funds. Even Chicagoland toll roads at their worst cost a pittance of what I paid in just two days commuting around Dallas. - john doe - Friday, Jun 4, 21 @ 10:17 am: There is no mention of the fact that much of the sales taxes often are paid by non-residents(visitors who may be medium to high income earners) - Dysfunction Junction - Friday, Jun 4, 21 @ 10:35 am: ==… much of the sales taxes often are paid by non-residents== Define much, JD. And I’d love to see some actual figures to back up that assertion. - john doe - Friday, Jun 4, 21 @ 10:48 am: =much of sales tax= I’m referring to tourist states-Florida,Nevada,Hawaii,California. - anon2 - Friday, Jun 4, 21 @ 10:58 am: Republicans say that making the rich to pay at higher rates is class warfare. Then what is it when the poor pay at an effective rate 5.5 times higher than the rich in Florida? Republicans staunchly oppose income taxes, but when they do agree to tax hikes,such as to pay for an infrastruture program,the taxes are always regressive, aggravating the regressivity of state tax systems.Is that sticking up for the working class? - anon2 - Friday, Jun 4, 21 @ 11:00 am: Republicans staunchly oppose income taxes, but when they do agree to tax hikes, such as to pay for an infrastruture program, the taxes are always regressive. That’s not sticking up for the working class. - anon2 - Friday, Jun 4, 21 @ 11:07 am: The GOP called the Fair Tax class warfare. Yet they admire “low-tax” Florida where the bottom quintile pays an effective rate 5.5 times higher than the rich. The real class warfare is when those least able to pay get socked with the heaviest tax burden. - Techie - Friday, Jun 4, 21 @ 11:21 am: The irony of the “class warfare” nonsense is that, to paraphrase Warren Buffet, class warfare already exists and his class is winning. Moreover, let’s consider an analogy. When it comes to baseball, does the MLB let the best performing teams get first pick for the next season? Does the NFL or the NBA do that? Or do they give a boost to the worst performing teams to give them a chance and encourage competition? Economics is the same - it’s another form of competition. Giving those who are currently doing the worst a boost and making things tougher for those who have been doing the best is simply a way to increase fairness and competition. But currently Illinois is doing the opposite of the major sports leagues; it’s hindering competition by making things easier for the successful and harder for the unsuccessful. And we wonder why problems abound. - thechampaignlife - Friday, Jun 4, 21 @ 11:30 am: Hey, at least we are consistent. Top 3 effective tax on poorest, richest, and overall. - Shield - Friday, Jun 4, 21 @ 11:47 am: - City Zen - Friday, Jun 4, 21 @ 9:58 am: Lowering property taxes will do nothing for low income people (more than half of low income people are renters). And if you think landlords are going to pass down property tax savings, I’ve got a bridge in Brooklyn to sell you. https://www.jchs.harvard.edu/sites/default/files/ahr2011-3-demographics.pdf https://www.jchs.harvard.edu/sites/default/files/media/imp/harvard_jchs_americas_rental_housing_2017_0.pdf - City Zen - Friday, Jun 4, 21 @ 11:47 am: ==Top 3 effective tax on poorest, richest, and overall.== Not the richest 1%. But Illinois residents between the richest and poorest groups have the 2nd highest tax burden in the country. https://itep.sfo2.digitaloceanspaces.com/whopays-ITEP-2018_appendixB.pdf - City Zen - Friday, Jun 4, 21 @ 12:25 pm: ==Lowering property taxes will do nothing for low income people== The ITEP study covers that: Renters do not escape property taxes. A portion of the property tax on rental property is passed through to renters in the form of higher rent — and these taxes represent a much larger share of income for poor families than for the wealthy. This adds to the regressivity of the property tax. - Al - Friday, Jun 4, 21 @ 12:34 pm: Far too often the discussion of Income Taxes involve feeling of Fairness and Discussion of Rates. Grow up already. Let us have a discussion on the Real known Costs of Rent, Utilities, food and sundry expenses related to raising children then determine the Standard Deduction and Exemptions Amounts. The Income tax does not work as well as it could because the Trust Fund babies insist that if they have to pay them everyone else must too, including their first income dollar for Fairness. Also think about this. You may not have $2,500 in fur coats in your closet. However Illinois Insurance statute requires a standard homeowner’s policy have this coverage. This way people with No furs subsidize the wealthy person’s fur insurance. - Ducky LaMoore - Friday, Jun 4, 21 @ 12:52 pm: “And if you think landlords are going to pass down property tax savings, I’ve got a bridge in Brooklyn to sell you.” Well… they will pass down those tax savings if they have to. It all depends on supply and demand. But you are right if demand is high and supply is low. Sorry, comments for this post are now closed.