Illinois comes in last in WalletHub tax ranking
In the wake of the 2017 Illinois budget crisis that left a 32 percent income tax hike in place over Gov. Bruce Rauner’s veto, a report has ranked Illinois last in terms of bang for its buck.
WalletHub, a consumer-focused website, annually ranks all U.S. states and Washington, D.C., with a calculation that applies tax rates in each state against median income.
According to this methodology, Illinois ranks 51st – meaning there is 38.34 percent difference Illinois residents pay in taxes compared with the average for the county.
That puts Illinois at a distinct disadvantage compared with nearby states. For example, neighboring Indiana came in at No. 35, paying only 10.25 percent difference over the national average, while Minnesota, ranked 31st, has only 7.56 difference. Residents of 30th-place Missouri only have a 4.86 difference.
Reading the fine print puts the statistics into perspective; the study’s median income was calculated at $55,754 and median home value logged in at $184,700, the study said.
Whether the findings represent a grim outlook for Illinois and other low-ranked states in terms of eroding population depends on a variety of factors, according to the experts WalletHub asked to weigh in on the findings.
For instance, the high Illinois tax burden would play a role but is not the first thing relocating workers might consider.
“Normally, from a socio-economic perspective, people consider the job first, then the area, then, maybe at the timing of their first paycheck, the state tax income tax rate,” Trent Batchelor, of the Coholdas College of Business at Northern Michigan University, told WalletHub.
Vicky C. Dominguez, professor of accounting at the College of Southern Nevada, said demographics play a role in whether taxes will discourage immigration to the state.
“I personally do not think that the younger generations of earners usually consider taxes when deciding where to live,” Dominguez said. “They are willing to move where employment pays high wages for the qualifications that they have accomplished.”