Weighed down by relatively high burdens for property and sales taxes, Illinois fares poorly in a new study that measures whether taxpayers are getting value for their money.
A report by the personal finance website WalletHub places Illinois 36th among the 50 states in overall return on taxpayers’ investment. The closer to No. 1, the better the ranking for the states.
Drawing on data from several nonpartisan sources, the report starts with each state’s overall tax burden and factors in measures of the quality of public services in areas such as education, health, safety, environment and infrastructure.
Illinois has a better showing on quality of services, ranking 21st in the WalletHub study. But its overall ranking is hurt by the state’s relatively high tax load.
A prior WalletHub report that drew heavily on data from the Tax Policy Center showed Illinois residents pay an average of 9.7% of their personal income toward state and local taxes. The burden was relatively highest for property and sales taxes, less so for income taxes. Residents in only nine other states paid more in the analysis.
In the ranking of overall value to taxpayers, Illinois finished worse than nearby states such as Missouri (5th), Iowa (11th), Wisconsin (13th), Kentucky (14th) and Indiana (29th).
The results cover only broad data for each state and do not distinguish between urban and rural communities or areas where access to services may differ. In addition, the study considers factors such as crime rates that may reflect more on social conditions than on the quality of public services.
Carol Portman, president of the nonpartisan Taxpayers’ Federation of Illinois, said the study may have drawbacks but still provides valuable comparisons. “It’s certainly true that by many measures Illinois’ tax burden is relatively high,” she said.
But Portman said service quality is hard to measure and tax burdens can vary widely depending on a person’s residence and income situation.
Retirees, for example, fare well in Illinois. The state is one of three in the U.S. that charges an income tax but excludes any form of retirement income, such as from pensions or 401(k)s. A group of senior business leaders in Chicago has called for an end to that blanket exclusion, but the idea has drawn little support from lawmakers.
The WalletHub report concluded that taxpayers in “red states” — those that voted Republican in the 2020 presidential election — get a better deal than those in “blue states,” which voted Democrat. Illinois voted Democrat.
It said the overall ranking for return on investment in the red states was 21.52 versus 29.48 in the blue states.
The states delivering the best value to taxpayers were New Hampshire, Florida, Alaska, South Dakota and Texas, WalletHub said.
Those with the best overall scores for public services were Virginia, Minnesota, Vermont, New Hampshire and Connecticut.
