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Does Illinois have an economic advantage over neighboring states?

Illinois Watchdog.Org

Tuesday, September 11, 2018  |  Article  |  By Cole Lauterbach

Economic Development (35) , Economic Stimulus , Economy (34)

Illinois lacks a clear economic advantage over its neighbors, according to new analysis.

A group in New Hampshire created a method to measure New Hampshire's economic advantage over its neighbors as the tides of taxation there change. When an analyst did the same for Illinois and its neighbors, he said the results were revealing.

TiA Graphic
Courtesy of Truth in Accounting

New Hampshire had historically lower tax burdens than its neighbors in the northeast. New Hampshire has no income, sales, or estate taxes, which the nonprofit Granite Institute attributed to what it called “the New Hampshire advantage,” an index based on the size of the private sector, taxes on individuals, taxes on consumption, taxes on businesses, and taxes on wealth. This, the group said, was responsible for New Hampshire's thriving economy. 

Bill Bergman with Chicago-based Truth in Accounting saw the analysis and used the State Datalabs database to evaluate Illinois and its neighboring states similarly. Illinois fared worse than its neighbors.

Bergman said the metrics shouldn’t be seen as an indictment of state and local officials, but rather a lesson for the people who put them there if they’re concerned about the state’s economy.

“Illinois, like New Jersey and Connecticut, you have states with a long way to go on things that help to produce economic growth,” he said.

Bergman said lower tax states have recently seen higher numbers of migration from other states.

Census numbers have also shown that these numbers correlate with more hospitable climates in many cases.

 

TiA Effective Tax Rate

 Courtesy of Truth in Accounting

In terms of overall tax burden, Illinois was the eighth-highest in the nation, according to financial website WalletHub. New Hampshire ranked 46th. Illinois was one of only a few states WalletHub estimated tax more than 10 percent of personal income.

For all of New Hampshire’s tax advantages, it was rated by WalletHub as having the highest property taxes per income in the nation as a percentage of personal income.