Is Illinois Over-Taxed?

With the 5% income tax rate about to expire, many politicians are complaining about how over-taxed Illinois residents are. Illinois residents are unhappy, and more people leave the state than move to it. But when asked why they plan to leave, only 8% cite taxes. Illinois tax collection lags behind most other states, including its neighbors, compared to the size of its economy. When examining all state taxes, not just income, as a percentage of state gross domestic product (GDP), Illinois is behind its neighbors; I added Massachusetts ,which is another flat-tax state.

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As one can see, for some time Illinois lagged significantly behind other states in state tax collection as a percentage of GDP. The Illinois fiscal problems reflect persistent  under-taxation given the size of its economy.

 

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