Among the 42 states that impose a personal income tax, which one puts the heaviest burden on a family of four whose breadwinner earns the minimum wage?
If you guessed Illinois (perhaps out of perverse pride) you’re only half right. When it comes to income tax regressivity, as with geography, the Land of Lincoln is side-by-side with the State of Indiana.
This is one sorry finding of a new study of state income taxes and the poor by the Washington-based Center on Budget and Policy Priorities. It couldn’t have come at a more important moment, what with the Illinois General Assembly locked in debate over how best to raise state funding for schools while lowering local property taxes.
Whatever is decided, lawmakers have got to make sure they don’t make Illinois’ tax structure any harder on the poor than it already is. (By, say, extending the sales tax to groceries.)
Actually, the new study only underscores what a lot of revenue experts have said all along: With its flat-rate 3 percent tax on federally reported income, its lack of a standard deduction and its skimpy $1,000 personal exemption, Illinois’ income tax hits hardest those least able to pay.
Whether through exemptions, deductions or credits, 18 income-taxing states (and the federal government) have managed to spare families earning less than last year’s “poverty line” income of $16,021.
And of the 24 states that do tax the working poor, the average income “threshold” above which taxes are paid was $10,342.
In Illinois, that poverty-level family starts owing at $4,000 and ends up paying $361, or nearly a month’s rent.
Now that thousands of Illinoisans are being rousted off the welfare rolls and onto the lower rungs of the economy, it’s time that the working poor got a better shake. And surely, not a worse one.
