Chicago City Wire

Illinois Is 2022’s State with the 10th Highest Tax Burden – WalletHub Study Illinois Is 2022’s State with the 10th Highest Tax Burden – WalletHub Study Hi Chicago City Wire News Team,

With Tax Day approaching on April 18 and 81% of Americans thinking that the government does not spend their tax dollars wisely, the personal-finance website WalletHub today released its 2022 Tax Burden by State report, as well as accompanying videos and expert commentary, along with its 2022 Tax Facts infographic.  

In order to determine which states tax their residents most aggressively, WalletHub compared the 50 states based on the three components of state tax burden — property taxes, individual income taxes, and sales and excise taxes — as a share of total personal income.

For the full report, please visit:

https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494

Please let me know if you have any questions or if you would like to schedule a phone, Skype or in-studio interview with one of our experts. Feel free to embed this YouTube video summarizing the study on your website. You can also use or edit these raw files as you see fit.

Best,

Diana Polk

WalletHub Communications Manager

(202) 684-6386

More from WalletHub

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• Most & Least Federally Dependent States
• 2022 WalletHub Tax Survey
• What to Do If You Can’t Pay Your Taxes
• Tax Scams & Tips for Avoiding Them
• Last-Minute Tax Tips

Expert Commentary

What state and local tax instruments are most fair? Least fair?

“Fairness is in the eye of the beholder. Some people see a tax as fair when everyone pays the same percentage tax rate, while others define fairness differently and want to see the tax burden rise as a share of income. Sales and property taxes are seen as fair to some because everyone generally pays the same tax rate. However, they are viewed by others as less fair because the tax burden falls as a share of income as income rises. Income taxes are broadly seen as more fair because they usually involve graduated marginal tax rates. In other words, those with more income pay a higher percentage of that income in taxes.”

Donald Bruce – Associate Director, Boyd Center for Business & Economic Research; Professor, The University of Tennessee

“The income tax tends to be the most fair tax, using a taxpayer's ability to pay as the measure of fairness. Income is closely tied to a person's ability to pay taxes. In addition, income as a tax base permits the progressive adjustment of rates as taxpayers' incomes increase. This is more difficult to achieve with sales taxes. Accordingly, the burden of sales taxes falls much more heavily on lower-income taxpayers, a result that violates fundamental fairness norms. Although sales taxes can be structured to provide exemptions or lower rates for the purchase of basic necessities, such as food, medicine, or certain essential services, these types of offsetting adjustments tend to introduce problematic inefficiencies into the system. In sum, primary reliance on sales taxes for state and local revenues results in a more regressive tax system.”

Mary L. Heen – Professor of Law Emerita, University of Richmond

What is the relationship between state tax burden and economic growth?

“The jury is out on this one. The ability of state taxes to contribute to economic growth depends critically on the use of those funds. Some states raise more revenue in taxes, but use that revenue to provide a menu of public services that can contribute in meaningful ways to economic growth. Examples are infrastructure projects and investments in human capital via public schools and universities and job-training programs. The right balance comes in raising the amount of revenue to provide the desired public services without having a tax burden that is high enough to cause some taxpayers to leave the area.”

Donald Bruce – Associate Director, Boyd Center for Business & Economic Research; Professor, The University of Tennessee

“During economic downturns, states that are more sales tax reliant will experience far greater instability collecting revenues. In addition to sales taxes causing regressive effects, states that rely on sales taxes for more than one-third of their revenues are more vulnerable to this instability, and as this reliance approaches and exceeds half this volatility becomes even worse…Income tax collections will also suffer in economic downturns, although not to the same degree as sales tax collections and perhaps not as much at the wealthiest income levels…Revenues from property taxes are the least affected by economic downturns, but again over-reliance on property tax structures causes other problems. I recommend that property taxes contribute at least one-fourth (one-third is better) to overall state and local tax revenues. The remaining revenues (keeping sales taxes at no more than one-fourth) should come from a well-designed income tax structure and other state and local taxes, such as franchise, real estate filing, and many other sources.”

Susan Pace Hamill – Professor of Law and Honors Professor, University of Alabama School of Law

What are the most effective ways for state and local governments to recover losses in tax revenues caused by the pandemic?

“Recent articles have noted that states have, to the surprise of many, suffered less financial damage during the pandemic than had been anticipated and feared. Even as revenues from income taxes declined, revenues from retail sales taxes held steady. Consumer spending has been bolstered by unemployment benefits and federal disbursements. Local governments, on the other hand, are likely to fare less well. Should there ultimately be a significant financial shortfall resulting from declining property tax collections, locals’ sole meaningful remedy will of necessity be to look to the state and the federal government for financial assistance.”

Mildred W. Robinson – Henry L. and Grace Doherty Charitable Foundation Professor of Law Emeritus, University of Virginia

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