Study illustrates where Illinois taxes come from
A new report shows where the Illinois state government gets most of its tax revenue from.
The Pew Charitable Trusts has produced a breakdown of where does the taxpayers money come from and it varies a lot.
In Illinois, nearly 40% of state taxes come from personal income tax. Broad-based personal income taxes are the largest source of tax revenue in 33 of the 41 states that impose them, with the highest share in Oregon at more than 63%.
States that do not have large-scale personal income taxes include New Hampshire, Tennessee, Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.
The second highest category of tax revenue for Illinois is general sales tax at 24%, followed by certain sales taxes at around 18% and corporate taxes at 10.3%.
Justin Theal, a state fiscal health project officer at Pew, said lawmakers should always have a good understanding of how a state’s tax system is set up.
“It’s important for policymakers to understand how states specifically collect their taxes because it highlights the unique mix of tax sources each state depends on to fund public services and achieve policy goals,” Theal said.
Tax revenues are one of the factors that help explain recent widespread government budget surpluses. According to the report, in the eight quarters ending in June, three-quarters of states received enough taxpayer money to offset their losses from the onset of the 2020 pandemic by the start of this fiscal year.
Theal said lawmakers can use the information to plan for economic downturns like a pandemic.
“Policymakers really should keep the volatility of each fiscal source in mind when considering the overall size of the state’s rainy day fund,” Theal said.
Illinois’ rainy day fund has been depleted for years and was down to just $60,000 in 2016. After filing $320 million earlier this month, it was determined that the state could run his government on savings alone for about a week.
This article originally appeared on The Center Square.