Illinois among states with highest income-tax burden on the poor - Liberty Justice Center

Illinois among states with highest income-tax burden on the poor

Illinois has the highest income taxes on the poor of almost any state in the country, with only Alabama and Hawaii taxing more, according to a study released by the National Center for Children in Poverty.

The research compared how much states took from poor families whose earnings are equal to the federal poverty level, which is just $23,850 for a family of four. Those low-income Illinois families pay $240 in state income taxes. That may not sound like very much, but $240 can go a long way for a family struggling to make ends meet. This easily exceeds half the monthly cost of food, and for families with young children, that money could easily pay for diapers for a few months.

The results echo another study conducted by the progressive-leaning Institute on Taxation and Economic Policy, which found that Illinois puts the second-highest tax burden of any state on the poor, considering income and sales taxes together. In Illinois, lower-income families pay 13.8 percent of their income in state income tax and state and local sales taxes.

And what are the poor getting in return for their tax dollars? Failing schools, crumbling infrastructure rated as mediocre at best, and a sluggish economy.

The solution is not simply to raise taxes on the wealthy, as some constantly push for in Illinois. The state’s fiscal difficulties have arisen because of unsustainable spending. Correcting this will require spending cuts and policy changes like a move toward 401(k)-style retirement plans for government employees. Grabbing more tax revenue from hardworking residents is not a long-term solution.

Illinoisans should get some relief when the income tax sunsets to 3.75 percent from 5 percent at the beginning of 2015. But much more needs to be done. Tax reform should give the poor relief by lowering the tax burden overall; encouraging the job growth necessary to raise Illinoisans out of poverty for good.

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