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From the AP:
The U.S. Census Bureau says Illinois residents paid $2,060 in state taxes per capita in 2005, the 29th highest amount in the country.The Census Bureau says the national average last year was just over $2,192.
That puts us just $20 higher than Indiana, $130 higher than Iowa, $361 lower than Wisconsin, $429 higher than Missouri and $336 lower than Michigan, to name a few neighbors. (Quick math, may be some minor errors.)
Also from the Census Bureau:
State government tax collections reached nearly $649 billion in fiscal year 2005, a $57 billion (9.7 percent) increase from 2004, the Census Bureau reported today.According to data from the 2005 Annual Survey of State Government Tax Collections, taxes on individual income were $221 billion, up 12.6 percent; and general sales taxes were $212 billion, up 7.2 percent. These taxes made up more than two-thirds of all state tax collections.
posted by Rich Miller
Monday, Apr 3, 06 @ 3:55 am
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Sounds to me like somone can afford a tax increase….
Of course property taxes, fees, fuel taxes, sales taxes, etc. are probably omitted from this study.
Comment by Leroy Monday, Apr 3, 06 @ 5:25 am
Rich-
The story focused on the wrong numbers by using the absolute dollars. If you look more closely, we’re only 41st on the basis of tax burden as a percent of income, 6% versus a national average of 6.8%.
It’s been clear for a long time that on this basis Illinois residents pay far less in taxes than most other states, which in part is why we have such budget problems.
Comment by Anon Monday, Apr 3, 06 @ 7:02 am
Before everyone rushes to conclusions, remember, these are only state tax collections - they don’t include local property taxes or municipal sales taxes, so they don’t reflect the entire tax obligation for Illinois citizens.
Comment by Budget Watcher Monday, Apr 3, 06 @ 7:40 am
Leroy,
The reported data is for state-level taxes. Illinois has many levels of local government (county, township, municipal, special districts). It doesn’t necessarily mean that we aren’t paying as much as, say, Wisconsin. Rather, it is just not paid directly to the state.
Anon,
Can you explain why, just because our income is higher, we should automatically pay more taxes?
Comment by Anonymous Monday, Apr 3, 06 @ 7:43 am
Anon 7:02 is right! We need huge tax increases, not spending decreases!
Vote Democrat for Higher Taxes!!!
Comment by Tax Hiker Monday, Apr 3, 06 @ 7:46 am
I think taxes are probably about where they should be. It is very hypocritical to look at a state and say, “Sounds to me like someone can afford a tax increase…” Maybe some of the higher taxing state surrounding Illinois could use a tax break. The overall problem concerning taxes is the government has no idea how to spend its money properly. Maybe the government should privatize more, that would save money. You would replace cushy bureaucratic jobs with hardworking private-sector jobs…. But, being related to some state employees, I doubt I will get very far with that argument…. either way, everyone’s taxes are still too high….
Comment by Lovie's Leather Monday, Apr 3, 06 @ 7:58 am
Tax hiker - If you reread what I said, I didn’t propose a tax hike. I just pointed out that we’re paying less than others. There is a policy debate that needs to take place as to what we want government to provide for us, and then we need to pay for it.
Anon 7:43 - I do think that looking at the tax burden is the appropriate measure. There’s a big difference paying $2,060 in taxes if you are making $15,000 a year versus if you’re making $500,000. Our state income tax is a flat tax as opposed to the federal where the percentage you pay increases with your income.
Comment by Anon 7:02 Monday, Apr 3, 06 @ 8:02 am
If someone jumped off the Brooklyn Bridge would you follow? Why should we justify a tax increase on the basis of other states having higher taxes? Restrained spending should be the key here to keep us on the straight and narrow without requiring a tax increase. But the politicians love to play with other peoples money.
Comment by Bill Monday, Apr 3, 06 @ 8:14 am
On an “all-in” basis, all state and local taxes included, our per capita tax rate as a percent of personal income is one of the very lowest in the nation. Whether you believe it is irrelevant.
There is nothing wrong per se with a low tax rate, but you can’t fund health care for kids, a good and equitable education system, pre-school, etc. on low taxes and we need to accept that. We need to make whatever choices we decide to make as a society. Least responsible are those who pretend that we can live a middle class lifestyle on minimum wage revenues.
Comment by steve schnorf Monday, Apr 3, 06 @ 8:41 am
The governor’s disingenuous claims notwithstanding, Illinois faces serious financial problems caused by profligate spending, not tax revenue shortfalls. Illinois spending must be reigned in or worse fiscal problems loom in the future. There are a long list of remedies to the budgetary problems. Most remedies entail spending cuts and restructuring, NOT tax increases and Enron-style accounting gimmicks. Further tax increases will continue to drive business and jobs out of Illinois. Peolpe will flee to lower tax states as well.
Using per-capita averages to compare taxes is a very limited means of comparison, particularly considering differences among states in population distributions, incomes, individual spending, tax types, and tax rates.
Comment by donchicago48 Monday, Apr 3, 06 @ 8:51 am
Steve is right. Illinois is a very low tax state. A large majority of Illinoisians have indicated more than once through various polls that they would support increasd taxes to pay for education and health care. Now that we have a program like AllKids in place, and a proposal like universal pre-school waiting for passage, we need legislators to have the Test.Vir. to pass appropriations to fund these critical programs.
My proposal:
Raise income tax to 4%. (5% with a prop tax swap).
Extend the sales tax to services.
Sell the tenth license and dedicate all new revenue from gaming to re-pay the state pension plans.
Close the software sales tax loophole.
Sell ISAC loan portifolio and dedicate the 3-5 hundred million to pay interest on pension or general obligation bonds. The money from the bonds could be invested by the pension funds and would earn 7-10% appreciation.
Extend the PTELL limits for another 5 years to provide relief for some property tax payers in rapidly appreciating areas.
There are solutions to the state’s structural deficiet. Let’s bite the bullet this year and improve the quality of life for all citizens.
Our citizens deserve nothing less.
Comment by The original Bill Monday, Apr 3, 06 @ 9:01 am
Original Bill,
Are you saying that your buddy Blago has no t. v.? Becuase he disagrees with you. Any 750 type arrangement will be vetoed.
Bring it on!
Comment by Anonymous Monday, Apr 3, 06 @ 9:27 am
Illinois business climate is already in a very unenvious position. Raising taxes will continue a downward spiral that will ultimately lead to economic stagnation and further tax revenue declines. Illinois economy has already failed to recover anything like surrounding states as this presentation clearly shows.
Comment by donchicago48 Monday, Apr 3, 06 @ 9:30 am
I blame George Ryan. Besides being corrupt, he inflated Illinois budget. I know Edgar and other past governors had their problems, but Ryan really made things bad for the future. And the democrats, as usual, are trying to make things worse. Yes, subsidized health care is worse, increased educational spending is worse. When liberals talk about taxes, they seem to forget that they pay them as well….
Comment by Lovie's Leather Monday, Apr 3, 06 @ 9:33 am
Don, in case you didn’t read Schnorf’s post, Illinois’ state and local tax burden is among the lowest in the nation.
And ignoring the ratio of what we make to what we pay in taxes comnpletely disconnects those numbers from reality.
And I share your frustration with the accounting shenanigans, but they shouldn’t surprise us. This is, after all, how Illinois families make ends meet when their incomes don’t meet their basic needs. Credit card debt goes up, other bills get paid late.
And just like Illinois families, there are only so many expenses we can eliminate. We can’t stop going to the doctor when we are sick. If there’s a hole in the roof, it makes sense to fix it. And dropping out of college doesn’t make much sense.
Comment by Yellow Dog Democrat Monday, Apr 3, 06 @ 9:36 am
Original Bill -
I like your proposal.
It will raise enough money for the next two years.
Then Illinois will need more. Then what?
Stop feeding the monster! It only gets more hungry.
Comment by Leroy Monday, Apr 3, 06 @ 9:37 am
I find it absolutely amazing that with the state’s finances in shambles right now and a governor in denial still passing more and more proposals that make the situation worse, some here would consider feeding his addiction to spending?!
C’mon. There will NEVER be enough revenues in this state to fund what politicians would like to spend. The good side to this mess right now is that it appears we’re near the end of what can be borrowed to fund even more. For at least this and the last administration, this state has been spending as Schnorf ironically says “minimum wage revenues on a middle class lifestyle.”
THAT is the problem. Spending more than we have. The solution is not to give those guilty of this out-of-control addiction to government spending MORE to spend!
What we’re seeing is the pain of having to responsibly budget for the first time in over ten years. Government can’t be all things to all people, and when it tries, we get what we’ve seen in Illinois the last several years. That politicians won’t “bite the bullet” and just raise taxes because they’re afraid they won’t get re-elected is a great thing in my opinion, and I hope it continues for a long, long time.
Comment by Anonymous Monday, Apr 3, 06 @ 9:40 am
Lovie - we haven’t forgotten we pay taxes, but liberals are pretty good at math. The state tax rate is 3%. The federal tax rate is as much as ten times that, something Republicans have conveniently ingnored since Republicans took charge of the federal government.
According to this site, the invasion and occupation of Iraq has already cost America $270 billion, with roughly $14.5 billion coming from Illinois. In three years.
Now, if you can point to a state program where we’re blowing $5 billion a year, I’m happy to listen. But with these numbers staring us in the face, it seems a little disingenuous of you to argue that we need to throw the bums out in Springfield but the bums in Washington are doing a fine job.
Comment by Yellow Dog Democrat Monday, Apr 3, 06 @ 9:45 am
Anon 9:40 — but give more money to George Bush, right? Right.
Comment by Yellow Dog Democrat Monday, Apr 3, 06 @ 9:46 am
YDD, if you want to argue federal spending, that’s fine. I thought this string was about state spending and taxation. But I’m not surprised you would try to change the subject from state taxes to the war in Iraq. Your partisan assumption hurts your argument on this topic.
Comment by Anonymous Monday, Apr 3, 06 @ 9:57 am
I didn’t read anything in the 9:40 post that said give more to George Bush. You partisan posters always compare parties to see who’s the least fiscally responsible, but that doesn’t excuse either party. I don’t approve of the fiscal policies of either Bush or Blagojevich.
It’s not too much to ask that our elected officials at the state and federal levels assess the fiscal and economic soundness of their policy decisions before making campaign promises. We’ve been deceived by our President and we’re being deceived by our Governor.
Comment by Budget Watcher Monday, Apr 3, 06 @ 10:04 am
Famnilies in their prime earning years now, with heads of household in their 20’s, 30’s and 40’s, will likely have to cover most of the costs of their retirements themselves, including significant retiree health care expenses. They will have to do this in a global economy in which
US employment is being squeezed by legal and illegal immigration and outsourcing around the globe. It’s not just data entry that is being outsourced. Any job that can be digitized can be outsourced, including, for example, accounting jobs, reading X-rays, many engineering tasks.
The middle class can’t afford a tax increase. They have all they can do, in this new economic environment, to take care of themselves and ensure decent housing, a decent education for their kids, and a decent retirement. And their retirement is likely to last longer than their parents’ and grandparents’ because of increased longevity and, if the current global job trends continue, because of forced early retirement.
Blago’s welfare state will likely suppress job creation in Illinois over time, except for do-nothing state jobs of course, and make the economic life tasks facing middle class workers even more difficult than they now are.
Interesting that none of the prox-tax advocates speak of taxing the wealthy via a change in the state constitution. Apparently the wealthy liberals who tend to lead the charge for higher taxes for everybody want to hang on to their money while making the middle class pay for all this.
Comment by Cassandra Monday, Apr 3, 06 @ 10:53 am
donchicago;
I beg to differ on one of your assumptions. The catalyst for the extraordinary budget problem we have been facing for the last 4 years was the result of a revenue problem. Had state revenues behaved the way they normally do in a recession, we would have dodged the bullet for at least a few more years. We could have then reined in spending a little and dealt with it like Edgar did, by holding down spending while revenue grew back.
But when revenues did something the scope of which was unparalleled in modern (post income tax) Illinois financial history, actually decline two years in a row, what was a growing concern became a full-fledged crisis. Governor Blagojevich did not create it. I doubt, however, that the result would have been greatly different had he been Governor then. It simply wasn’t possible to anticipate revenues falling by almost a billion dollars in one year, when they had never, even in our worst recessions, fallen at all since the Ogilvie administration (actually, further back than that). No state in the Union adequately forsaw what was coming.
However, your larger point is correct I believe. We were in a situation where revenue growth could not have kept up with appropriation increases for more than a few more years. If there had been no recession, or a much milder one (in terms of Illinois revenue growth), we could have continued putting a few hundred million in education and covering health care cost increases for a while. Revenue growth would probably been $750m-$1.1b per year.
But the elephant was already in the room-pensions.
Our pension problem is not spending in the normal sense of the word, since the employer/employee contribution of 4% each would approximately fund each year’s new pension liabilities. But, there is no revenue source anywhere (unless we want to absolutely freeze for 10 years, and probably decrease, spending in all other areas of the state budget) to pay the principal and interest on more than 20 years of past debt, growing at an effective interest rate of 8+% a year. That was inescapable, and would have hit us with undeniable serious problems by late in this decade. We are going to continue going further in the hole on pensions as long out as I can forecast, and so each new year’s unfunded liability simply worsens our already unsolvable problem.
In a way, it’s probably good that it hit us sooner rather than later, since government’s reaction to problems of this nature and scope is almost always denial or procrastination (witness Bush, Congress, and Social Security). The farther out the crisis, the less willingness to do the hard things that need to be done. So, by today we would probably be just starting the one time revenue gimmicks rather than being into the fifth year of them, trying to put the crisis off for a little longer.
I can only tell you what I believe from my past experiences. I believe there will never be the political will, regardless of which party is in control, to make the spending cuts necessary to solve the problem we’re in.
Comment by steve schnorf Monday, Apr 3, 06 @ 11:37 am
The revenue dive in FY 2002 and FY 2003 certainly accelerated the budget crisis, but as Mr. Schnorf indicated, the divergence of revenues and expenditures was inevitable. One thing that many people forget, however, was that the federal government gave the state about $800 million in one-time revenue in FY2003 & 04, some of it ($380 mil) from upping the federal match on Medicaid and some ($422 mil) in one-time bailout money. Can you imagine how bad the budget would have been absent that infusion of cash?
I also agree that pension obligations are the biggest long term problem, with Medicaid right behind as the every-growing and reoccurring problem. Neither issue has been seriously addressed in the last four years. There’s nothing publicly appealing to solving these kind of issues, and to acknowledge them would interfere with the progressive agenda of the Governor.
Surprisingly, with education funding topping the list of many Illinois citizens, we haven’t seen a significant committment to boosting education in the last three budgets.
Nevertheless, it Mr. Schnorf is correct, and I believe that he is, that the legislature lacks the political will to cut spending and programs, then this doesn’t leave many options other than to raise income and/or sales taxes.
Comment by Budget Watcher Monday, Apr 3, 06 @ 3:12 pm
Sounds to me like we need to move to Missouri.I can see now why so many businesses are jumping across the river.I like how anytime you discuss something like this these Blago-maniacs try to lay it at Washington’s door.The study was done on the states.It is here today and it is a problem that the CURRENT governor has no idea or ability on how to solve it.
Comment by DOWNSTATE Monday, Apr 3, 06 @ 3:15 pm
This does mean more than half the states have higher taxes than us…stop your complaining! Its the same people that would say they were too high even if we were ranked the lowest in the nation.
Comment by John H. Monday, Apr 3, 06 @ 3:19 pm
Hey Downstate 3:15 if you think you would like MO then you should try Arkansas. It is cheapeer and you can marry your cousin when you are 14!
Comment by Reddbyrd Monday, Apr 3, 06 @ 4:20 pm
I also belive Mr. Schnorf is correct. Permit me to offer this bit of anecdotal evidence. I am contemplating retirement in the next 5 years and have investigated the cost of acquiring property in Wisconsin as my eventual retirement home. Property taxes for a home are at least 1/3 higher in Wisconsin than in Illinois. In addition, none of my pension income will be subject to the 3% Illinois income tax. All of it is taxable in Wisconsin, up to 9%. These 2 factors alone will cost me an additional $7,000 per year just for the privilege of living in Wisconsin.
Comment by one of the 35 Monday, Apr 3, 06 @ 5:14 pm
Hey Redbyrd 4 more years of Blago and we will all have to move.
Comment by DOWNSTATE Monday, Apr 3, 06 @ 6:27 pm
one of the 35 -
So are you going to do it?
Comment by Johnny USA Monday, Apr 3, 06 @ 9:12 pm
Johnny USA:
It’s a tough call when your grandchildren are living in Wisconsin. But McHenry, Woodstock, and Harvard Illinois aren’t that far away from Wisconsin either.
Comment by one of the 35 Tuesday, Apr 4, 06 @ 4:09 pm