Wednesday, January 12, 2011

About Illinois' 67 percent tax increase (Or: Math is scary)

This is always the part that gets attention:

In the final hours of its lame duck session, the Illinois legislature (barely) approved a 67 percent percent increase in the state's personal income tax.

This is not:

The hike will bump personal income taxes up from 3 percent to 5 percent.

I won't argue that a bump in the tax rate from 3 to 5 percent isn't significant. But that two-point bump certainly looks a lot less significant and alarming than a 67 percent increase, doesn't it?

For what it's worth: The median household income in Illinois in 2009 was a bit more than $53,000 a year. Assuming the earners in the household get paid every two weeks, that amount comes out to $2,076 biweekly. Right now, lllinois is collecting a bit more than $62 per paycheck. After the tax increase, it'll be $104 a paycheck -- a difference of $42, more or less. That's $84 a month out of take-home pay, and for most families that's nothing to sneeze at. But these, at least, are useful numbers in understanding the magnitude of the tax increase. The nationwide headlines shouting about a 67 percent increase! tell you the scariest-sounding but least-illuminating bit of information about the story.

1 comment:

namefromthepast said...

Couple of other headline choices that I agree would be much more illuminating.

"Illinois used to get by on 60% of the income tax revenues it now needs"

"State of Illinois to confiscate an additional $80/month from average household"

Hey this is fun!

"Illinois now in the lead by 1 point in income tax race with rival Michigan"

"Illinois-Only Massachusetts has a higher flat income tax"

"America see taxation future in liberal strongholds like Illinois, NY and California"