Monday, April 18, 2005

Illinois' tax system is among the most unfair in the nation, according to Governing Magazine

Governing Magazine (what, you didn't find that at Walgreen's next to the Angelina Jolie cover?) has rated all 50 states' tax systems. It's two years old, but still largely accurate.

We come out with 2 out of 4 stars in "adequacy of revenue", 1 out of 4 stars in "fairness to taxpayers" and 2 out of 4 stars in "management of the system"

The link is here.

The reason why we are rated so poorly for 'fairness to taxpayers' is because we start taxing income earned after $2,000 -- which means we tax poverty wages. And higher income dollars (like those earned after the first $85,000) are taxed at the same 3% rate as the ten thousandth dollar earned. Which is dumb for the state economy for a number of reasons, and also unfair. The other main reason why we are unfair is that all pension income is untaxed. All of it. So the 75-year old Wal-Mart greeter pays the 3% income tax, but the vacationing pensioner does not. That's not cool.

3 comments:

Cal Skinner said...

Of course, we could tax pensions and give more people an incentive to move south. Guess we'd lose their sales taxes, however.

FightforJustice said...

How many states do tax pensions at some level? If it's most states, and if a future IL tax were modest, it might not chase many pensioners away.

Dan Johnson-Weinberger said...

I think we're the only state not to tax pension income above $20,000. But since Florida doesn't tax income at all, those pensioners run south anyway.