The Silent Epidemic {Part II Rendering Unto Caesar}

The issue of tax paying is as old as human civilization and the resentment to being compelled to render unto Caesar is probably just as ancient.  Human history is filled with revolts and wars over paying taxes.  The United States began as a tax revolt from the British King.  Yet governments since the dawn of time have needed a way to fund their expenditures and some sort of burden sharing with the population has always been necessary.  Today we have perhaps better and perhaps more fair ways of taxing then were used in antiquity but the need to fund the essential services of government is ongoing, as is the creative ways these same governments have come up with to fund those essential services.

As I've said in previous posts this series of articles is not debating what taxes are imposed or on whom they should be targeted.  But the basic reality is that no matter where you live you are going to pay taxes in many different forms.  You pay income taxes in most states.  You pay sales taxes, property taxes, use taxes, tolls, amusement taxes, gas taxes etc.  Some of these are hidden from you.  Yes, you can see your sales taxes on a bill but most of us today probably just look at the final line when we get out our wallets.  Other taxes are more hidden.  The gas tax in Illinois doubled from 19 cents per gallon to 38 cents per gallon back on July 1st but I'll bet most people have forgotten that by now, if they ever knew what they were paying.  For most of us the price at the pump is what's important when we fill up our cars.  Similarly,  take a look at your cell phone bill at some point.  My math tells me I pay over 16% in various charges for my basic cell phone plan.    

Governments at all levels in Illinois, especially as the pension burdens have become so immense here, have been forced to raise taxes in every conceivable manner possible.  Politicians prefer raising taxes in ways that the average person doesn't necessarily see reflected on their paychecks or their property tax bill, but that doesn't mean citizens don't foot the bill.  Starting in January, 2019 for some new fees but mostly on July 1st  Illinoisans started paying what is estimated to be nearly $4.6 billion in new taxes.  This includes everything from the above noted doubling of the state gas tax to taxes on marijuana sales, to increases on cigarettes, e-cigarettes and parking garage fees.  

In Chicago taxes were raised this year on home sharing {ie renting out your property on a web site}, liquid nicotine, ground transportation {taxi's and the like}, water and sewer, tobacco, amusements {sporting events etc.} parking and online sales.  To plug a currently estimated $838 million budget shortfall in next year's budget the new mayor of Chicago is proposing new taxes or increasing taxes on other items.  Even that won't be enough to pay the bills without help from the state and gimmickry.

Again, this is not a series devoted to debating the issues of taxes.  For the purposes of everything I'm covering here I don't care why citizens are paying what they are.    Also I'm not here to have the debate on whether taxing items like cigarettes or alcohol at a higher rate is good on a societal basis.  Instead I'm limiting this discussion to the consequences of these actions.  One of the main results is that Illinois ranks dead last in terms of the tax burden in places on its household.  WalletHub calculates that the effective tax rate on a median household in the state is 14.9% and costs that median household nearly $8,600 annually in taxes.  You can click on the link above to see their methodology and I'm sure one can find other studies that show different numbers.  However, nobody argues that the tax burden hurdle isn't very high in Illinois.  For comparison, according to WalletHub that median dollar calculation is around $7,200 in Wisconsin, around $5,950 in Michigan and $5,815 in Indiana.  I picked these states because they closely neighbor the Chicago region.  Also remember that's for the state.  The tax burden is likely higher in Chicago and Cook County.   Finally this burden is tacked onto what folks already pay in Federal taxes, FICA and healthcare.  It is not hard when doing the math on taxes at every level to come up with the calculation that the average tax burden for middle class citizens in Illinois is likely well over 50% of their income.  Add in the potential costs of health care and it't not hard to see how the middle class continues to get squeezed.

Later in this series we'll run some actual numbers as illustrations on what we're cumulatively discussing.  Today we've hopefully laid the groundwork for understanding the massive burden we're placing on households in the state.  Death and taxes may be the only two certainties in life but never has rendering unto Caesar been as burdensome as it likely is now for the citizens of our state and especially for those of us that live in Chicago, Cook County or both.

Coming in the next article we'll take a look at the toll of rising property taxes.