We work hard for our money. We do so to provide for our families, to live comfortably, to have choices, and to provide a future for our children. Along the way, we plan for and anticipate taxes, including federal taxes, state income taxes, sales taxes, corporate taxes, and property taxes. In tandem with our planning, we have an expectation, or a civic contract with our government that our tax dollars are being used wisely and that our taxes will remain consistent and predictable. Unfortunately, many taxpayers in Illinois are becoming increasingly frustrated with the state’s taxes.
Income Tax Increase
The state of Illinois has struggled to balance its budget for decades. Since 1969, when the Illinois legislature passed its first state income tax obligation, there has been a ceaseless battle between those who want tax increases, and those who want tax cuts. Over time, Illinois has created an incredible tax burden on its citizens. In fact, a March 2017 study found that Illinois is the worst state in which to be a taxpayer.
To make matters worse, effective the fiscal year beginning July 1, 2017, the income tax rate increased by 32% for Illinois taxpayers, rising from 3.75% to 4.95%. In theory, this increase is estimated to cost taxpayers $5 billion. This was the culmination of a two-year legislative fight, which saw a Governor’s veto, then an override by the legislature. For median-income families, this will take an additional $1200 from their pockets each year. This number will be much higher for families with higher incomes. In addition, there will be no relief for families who already pay high property taxes.
These tax increases have not been without consequence. Over the last several years, there has been a disturbing trend, referred to as a “wealth flight” from Illinois. In other words, many people with higher incomes are fleeing Illinois at a greater rate than people are moving to Illinois. In fact, between 2006 and 2015, over 700,000 people have moved away from Illinois. Further, 2016 polling of registered Illinois voters indicated that more than 47 percent of those polled indicated that they want to move out of state and that the top reason for this is high taxes.
Significantly, in 2015, Chicago experienced the largest exit of millionaires of any major city in the country, and statistically lost more wealthy taxpayers than the troubled economies of Brazil and Russia. Unfortunately for Illinois, as taxes increase, wealthy taxpayers are clearly seeing advantages in leaving the state to save money. Meanwhile, other states are benefiting.
You Need a Tax Attorney
As state taxes increase, it is wise to look for opportunities to reduce your overall tax obligation. You should not be financially punished for choosing to remain in Illinois. For advice and a legal tax consultation, contact the Law Offices of Robert S. Thomas. I have been a tax attorney for two decades, have a Master of Law Degree (LLM) in Taxation, and am licensed to practice in the United States Tax Court. Contact The Law Offices of Robert S. Thomas at 847-392-5893 for a consultation or visit our website today.