Is Illinois second worst for property taxes in U.S.? Sort of
Only residents of the Garden State are paying more property taxes this year than those living in the Land of Lincoln.
That's according to a report issued Tuesday by WalletHub, a personal finance research and analysis website, stating the average homeowner in Illinois would pay $3,959 in property taxes in 2016, second only to New Jersey's $4,029 average property tax bill.
But how does our total tax burden stack up? Tax experts say the report doesn't show the entire picture.
“All other things aren't equal,” said Ralph Martire, executive director of the Center for Tax and Budget Accountability, a bipartisan government finance think tank based in Chicago. “You've got to look at all the other taxes and fees.”
Actually, according to a 2013 report by the Federation of Tax Administrators, Illinois is right in the middle in terms of state and local revenue collected from taxpayers in relation to personal income. The report ranks Illinois at No. 25, with 15.1 percent of all personal income going to state and local taxes and fees.
Indiana ranked 26, also with 15.1 percent of income going to taxes, and Wisconsin was the 20th highest with 15.9 percent of personal income going to state and local taxes and fees, according to the report.
“I don't think it's a shocking revelation that property taxes are high in Illinois,” said Madeleine Doubek, chief operating officer of Chicago-based Reboot Illinois, a voter-advocacy digital media group. “It certainly isn't accounting for all the taxes we get saddled with, but it's a pretty good indication of what troubles a lot of people.”
WalletHub used U.S. Census Bureau data comparing the median property tax payment in each state to the median home price to determine a property tax rate, and then multiplied that rate to the median value of an American home — $175,700 — to come up with comparable property tax burdens nationwide.
Hawaii was ranked first in the WalletHub report, with owners of that average $175,700 American home paying just $489 in property taxes this year. However, Hawaii has the sixth-highest rate of all taxes and fees paid by its residents, according to the Federation of Tax Administrators study.
The experts agreed the WalletHub report just shows that Illinois is more heavily reliant on property taxes than other states. The majority of property taxes go toward funding operational costs of local school districts. On average, 65 percent to 75 percent of an Illinois homeowner's property taxes will go to the local schools.
Doubek said lawmakers have to “strike a better balance” to make schools less reliant on property taxes, so school districts in areas with lower property values don't struggle as much financially.
To highlight her point, Doubek noted voters of nearly 100 taxing bodies statewide will be asked to increase property taxes on Tuesday.