STUMP » Articles » Taxing Tuesday: Is Illinois a Low Tax State? » 30 July 2019, 14:28

Where Stu & MP spout off about everything.

Taxing Tuesday: Is Illinois a Low Tax State?  

by

30 July 2019, 14:28

Bwa ha ha ha ha.

Okay, fine.

Wirepoints: Progressive tax proponents say Illinois is a low-tax state, your tax bills say the opposite

Gov. J.B. Pritzker wants you to think Illinois doesn’t tax or spend enough. “A fair tax system will allow us to eliminate the structural deficit that has plagued our state for nearly two decades,” the governor said in his first budget address.

But there’s plenty of data which shows Illinoisans are far from undertaxed. On the contrary, residents face one of the highest combined state/local tax burdens in the country. High taxes is one of the reasons why Illinois is losing more people than every other state in the country, bar New York.

Yet the low-tax myth is consistently repeated by proponents of the progressive tax, especially Ralph Martire, head of the union-backed CTBA. Illinois is a “relatively low tax” state he says, with “one of the 10 lowest combined state and local tax burdens.”

That claim is contradicted by analyses from a Chicago Fed economist to the Tax Foundation to personal-finance firm WalletHub. All show Illinois to be a high tax state once all state and local taxes are added up.

Pretty much. Read the whole thing – it has graphs and everything.

VALUE OF THE SALT DEDUCTION

I dug up this Tax Foundation testimony re: the SALT cap:

Prior to the TCJA, the top ten counties that claimed the SALT deduction were concentrated in four states: New Jersey, California, New York, and Connecticut.2 Six states– California, New York, New Jersey, Illinois, Texas, and Pennsylvania– claimed more than half of the deduction.3

Let’s look up their source. Ah, it’s their own research: The State and Local Tax Deduction: A Primer from March 2017.

The deduction favors high-income, high-tax states like California and New York, which together receive nearly one-third of the deduction’s total value nationwide. Six states—California, New York, New Jersey, Illinois, Texas, and Pennsylvania—claim more than half of the value of the deduction.

They have a data table farther down using IRS data from 2014.

Here’s a map:

(Looking at NY: We’re number one! We’re number one!) Fine, Illinois is only #10. That is far from being low tax, though.

But let us investigate how much the SALT deduction is to various states, shall we?

I want to graph the percentage of the “share” of the deduction benefit….

….AND compare it to the population by state, to make a fair comparison.

Are half the nation’s population in the 6 states receiving the benefit? First answer: no. They’re less than 40% of the U.S. population.

Fine, how about the state-by-state disparity?

Unsurprisingly, no-state-income-tax states (at least some of them) have the biggest deficits in receiving their share of the SALT deduction, going simply by population.

I will simply list the top six states for disparity between their share of SALT deduction benefit and share of population: (I’m listing the percentages)

1. California 7.4%
2. New York 7.1%
3. New Jersey 3.1%
4. Connecticut 1.5%
5. Massachusetts 1.4%
6. Maryland 1.3%

Hmmm. So. The states suing the IRS and federal government over the SALT cap get disproportionate benefit from the SALT deduction (CT, MD, NJ, NY). What a non-surprise.

Underlying spreadsheet

WE’LL TAX YOUR WINE, FRANCE!

Last week I looked at the French attempt to tax U.S. tech firms. Obviously, Trump has something to say about it (even though the tech firms aren’t his buds):

Trump Says U.S. to Take Action Against France for Tax on American Tech Companies

President Trump promised to take “substantial reciprocal action” against France after the nation’s President Emmanuel Macron this week signed into law a tax on American tech giants like Alphabet Inc.‘s Google and Amazon.com Inc.

“France just put a digital tax on our great American technology companies,” Mr. Trump said on Twitter on Friday. “If anybody taxes them, it should be their home Country, the USA. We will announce a substantial reciprocal action on Macron’s foolishness shortly. I’ve always said American wine is better than French wine!”

Despite Mr. Trump’s mention of French wine, it couldn’t be immediately determined what the reciprocal action would target.
…..
In 2018, French imports to the U.S. totaled $52 billion, of which about $5 billion is alcoholic beverages, according to Commerce Department data.

Hmmm, about 10% of their imports. Are US tech services about 10% of our exports to France? No clue.

TAX STORIES

I think it would be hilarious if the ultimate “we must impeach!” group finally settles on the tax returns as the immediate cause for impeachment. They’re at a bit of a loss for what to pin it on right now.

TAX TWEETS

This is about taxes (and the budget) in Ghana. More here: Government increases ‘talk tax’ to 9%. They also canceled a luxury car tax.


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