You have to hand it to the state of Illinois. When it comes to taxing its residents, the state doesn't discriminate.
As Gov. J.B. Pritzker and Democratic lawmakers move forward with plans to change the constitution to allow for what they've dubbed a "fair" income tax, a new report indicates that Illinois has been fair when it comes to taxing all income levels in the state.
That's "fair" as in fairly high taxes for everyone.
The report from financial website Wallethub, 2019's Best States to Be Rich or Poor from a Tax Perspective, indicates that Illinois ranks second- or third-worst when compared to other U.S. states and Washington D.C. in taxing low-, middle- and high-income wage earners.
According to the analysis, Illinois ranks (with 1 meaning the state's overall tax structure is the least burdensome, 25 being average, and 51st meaning the tax structure is most burdensome):
• 50th in taxing low-income earners (13.18 percent of income).
• 50th in taxing middle-income earners (11.71 percent of income).
• 49th in taxing high income-earners (11.01 percent of income).
For low-income wage earners, only the state of Washington's tax burden is higher, with a rate of 14.59 percent, according to the Wallethub study.
For middle-income wage earners, only the state of New York's burden is higher, with a rate of 12.7 percent.
And for high-income wage earners, only the states of Connecticut (11.13 percent) and New York (12.48 percent) have larger tax burdens.
If nothing else, Illinois is an equal-opportunity, high-tax state.
I guess that's something we should be proud of, right?
"Clearly, all Illinois residents, regardless of income bracket, have a headache when it comes to paying their taxes," Wallethub analyst Jill Gonzalez said. "Property taxes [in Illinois] in particular are some of the highest nationwide, taking up as much as 5.1 percent from the income of those in the lower brackets. Those who earn the least have an income tax burden of 2.28 percent of their earnings, the fifth-highest share in the country."
Wallethub notes that its analysis doesn't focus on tax rates. Instead, it looks at it more objectively and studies "the share of a person’s income that he or she contributes toward various tax obligations. For instance, tax rates may be lower in one state, but because of a comparatively higher cost of living, the actual tax burden may be higher for that state’s residents."
Of course, being one of the two or three most burdensome taxing states in the country has consequences. We don't need to look any further than the annual U.S. Census population updates to understand the consequences here in Illinois.
Illinois' population has dropped for five consecutive years, including the second-largest, single-year decline in 2018. Last year, the state shrunk by 45,116 people. And let's be clear: It's not solely a reflection of older retirees seeking warmer weather that's driving the numbers south. It's working-age people seeking better opportunities and lower taxes elsewhere.
Illinois' current flat income tax rate is 4.95 percent. With the second highest property taxes in the country and exceptionally high sales taxes, the flat income tax is one of the few advantages the state has over its neighbors and many other U.S. states. If Pritzker and Democratic lawmakers are successful in getting a progressive (they like to market it as "fair") income tax approved, one in which higher earners are taxed at higher rates, how' will that affect the state's rankings?
"Currently, the income tax burden in Illinois is the 13th highest for middle-income earners, and the 23rd highest for those with high earnings," Gonzalez said. "Those numbers would probably get a little worse, while the low-income ranking would get better."
Just a little worse? Because no one knows what the proposed rates are yet, it's impossible to say for sure.
But when you're already at the bottom, there's not much room to fall, anyway.