Are You Taxed Enough Already?

Tax hike advocates often argue that Illinois is a low-tax state. Unfortunately for taxpayers, facts are not on their side.

If you add up state and local taxes, Illinois residents have the 9th-highest overall tax burden per capita in the nation as of 2010. AND that’s even before factoring in the 67% income tax hike from 2011 (tax data for 2011 is not yet available).

Any home owner in Illinois can tell you that one of the most painful taxes residents face is property taxes. Property taxes fund a multitude of local government agencies, such as: municipalities, schools, park districts, libraries, TIF districts, mosquito abatement districts, townships, counties and more.

With 6,968 local governments, Illinois has 2,000 more local units of government than any other state. Pennsylvania comes in second with 4,905.

These local governments place a hefty burden on taxpayers.

Tax Foundation data show that Illinois has the 2nd-highest property taxes on owner occupied housing as percentage of median home value.

As of 2010, the median Illinois resident’s property tax rate was 1.93%, which is equivalent to $5,790 in property taxes annually on a $300,000 home.

This rate is second only to New Jersey’s rate of 2.01%.

Here’s a look at how Illinois’ property tax rates stacks up against its neighbors:

Tax Foundation also breaks down property taxes on a county-by-county basis.

Illinois has 17 counties that rank in the top 100 nationally for the highest median effective property tax rates.

High taxes are a major problem in Illinois and continue to drive away residents. Illinois’out-migration ranking was #1 in the year of the massive 2011 income tax hike, and #2 in 2012. New Jersey was the only state with a worse outbound traffic rate in 2012 and happens to be the only state with a higher property tax rate than Illinois.

Adding insult to injury, property taxes in Illinois often increase even when property values decrease. In addition to reining in the size and scope of government, action is needed on the state and local level to control property taxes.

Fortunately there is a proposal to have property tax levies frozen when property values decrease. A bill sponsored by state Rep. Jack Franks, D-Marengo, House Bill 89, which would freeze property tax levies in years when the equalized assessed value of all properties in the district dropped. If a district wants to increase property tax levies they would have to go to a referendum of local voters.

Illinois property owners are buried under the weight of high property taxes – something has got to give. Common sense reforms like HB 89 are long overdue and are a good first step.

Brian Costin
Director of Government Reform

Illinois Policy Institute
190 S. LaSalle St.
Suite 1630

Chicago, Illinois 60603

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