State taxes sixth highest in nation
State governments collected $781.8 billion in fiscal year 2008, according to the U.S. Census Bureau – up 3.2 percent, or $24.5 billion, from 2007.
Ouch.
According to data from the 2008 Annual Survey of State Government Tax Collections, taxes on individual income were $280.7 billion – up 5.1 percent; general sales taxes were $240.6 billion, up .9 percent; and corporation net income taxes were $51.8 billion, down 2.5 percent. These taxes made up 73.3 percent of all state tax collections nationally. The aforementioned data pertains to the state fiscal years which end June 30. The exceptions are New York, Texas, Alabama and Michigan.
Illlinois ranks sixth in the nation in the amount collected in taxes last year – a whopping $31.5 billion – behind, in order, California, New York, Texas, Florida and Pennsylvania; and just head of New Jersey. The list is identical to 2007. Property taxes accounted for a paltry – did I say that? – $59.1 million. The real money came from sales taxes and income taxes, more than $14.2 billion ... each. Licenses, required for everything from fishing to driving a car, totaled $2.5 billion.
I mention all of this because we are in the throes of tax time. We are filing state and federal income tax returns. We are struggling to figure out how we’re going to pay our property tax bills and vehicle licenses. By the way, as part of Gov. Pat Quinn’s $53 billion budget plan for fiscal year 2010, vehicle plates would jump $20 to $99 and four-year licenses would double in price to $20.
Quinn also is proposing a 2.4 percent jump in the corporate income tax rate up to 7.2 percent – plus the ongoing 2.5 percent corporate replacement tax. The personal income tax rate would climb 1.5 percent to 4.5 percent under the plan. Accounting for additional deductions, the proposed increase in the personal tax rate should have no impact on families earning $60,900 or less a year, Quinn said. In fact, if the tax reform plan becomes law, a family of four earning nearly $61,000 a year would pay less taxes in 2010.
Quinn argued that retail sales in Illinois are projected to fall 4.4 percent between fiscal 2009 and 2010. Revenue is expected to decrease by $2.5 billion in fiscal year 2009 and is projected to continue this decline through most of fiscal 2010. Add in increases for Medicare, social services and employee benefits and the governor predicted Illinois will be staring at an $11.6 billion deficit by the end of next year ... without some type of reforms. Clearly something substantive has to be done, unlike the Band-Aid approaches of the past such as borrowing from state pension funds or leasing tollways to third parties.
But in a state already reeling beneath the weight of 8.6 percent unemployment (more than 9 percent in McHenry and Kane counties), you have to question the wisdom of further taxing potential employers. According to Jim Tobin, president of National Taxpayers United of Illinois, the proposal would make Illinois’ tax the fifth highest in the nation.
Double ouch.
– Kurt Begalka
