Taxes: Who’s giving vs. who’s getting?

Bill Knight column 9-27, 28 or 29. 2021

Studies showing how much areas pay in taxes vs. how much they receive from the government can be revealing, either contradicting or reinforcing regional resentments based on feelings, not facts.

For instance, Illinois gets about 60 cents for every $1 taxpayers send to the U.S. Treasury Department, according to the personal-finance website WalletHub. Illinois is one of 14 such “giving” states.

Comparing 50 states and the District of Columbia, WalletHub documents dollars paid in federal income taxes and federal spending per capita, and the percentage of states’ revenues returning in federal funding.

Ten states get twice the money they sent to D.C.: Alabama, Florida, Hawaii, Indiana, Kentucky, Mississippi, New Mexico, North Dakota, South Carolina and West Virginia. (South Carolina leads the “getting” states, receiving almost $8 for each $1 taxpayers send to the U.S. government.)

The 14 “giving” states receiving less than $1 for every $1 they contribute in federal income taxes are: California, Colorado, Delaware, Illinois, Kansas, Massachusetts, Minnesota, Nebraska, New Jersey, New York, Ohio, Oklahoma, Utah and Wyoming.

Poverty is a bigger influence than population, measured by states’ poverty rates and the number of residents eligible for social services such as food stamps (the Supplemental Nutrition Assistance Program, or SNAP). Mississippi and New Mexico have more than 20% of their population eligible for food stamps; Illinois has about 15%. Other factors could include effects from having a government institution in an area, like a public university, military base or prison.

“It is red states that are overwhelmingly the ‘Welfare Queen States’,” wrote John Tierney in The Atlantic magazine in 2014. “Red States – the ones governed by folks who think government is too big and spending needs to be cut – are a net drain on the economy.”

A similar “giving/getting” relationship exists within Illinois.

Illinois outside Chicago and its surrounding area receive more in state funding – overall up to $2.88 for each $1 paid in state income taxes – according to an updated study by professors John Foster and John Jackson with Southern Illinois University’s Paul Simon Institute.

Cook County and five adjacent counties (DuPage, Kane, Lake, McHenry and Will) together chip in more to the state budget than Springfield spends there, according to the most recent figures from the General Assembly’s bipartisan Commission on Forecasting and Government Accountability used by the SIU researchers.

Cook paid $12.43 billion and received $12.18 billion. That compares to suburban counties paying $8.5 billion and getting $5.1 billion back, and Downstate counties paying $8.2 billion but receiving $13.9 billion, the two say in their 56-page report, “The Politics of Public Budgeting in Illinois” (online at https://opensiuc.lib.siu.edu/ppi_papers/59/ ).

“Americans in general do not like taxes, and the people of Illinois are no exception,” the study says. But “no matter how much we hate taxes in general, we do like a great number of concrete public policies and programs that are supported by that revenue.”

A Downstate impulse to separate from Chicago is reflected in one of the pair’s surveys, which asked “whether the state is distributing governmental resources in an equitable manner.” Although 60+% of every region of the state responded, “not at all or only a little,” the greatest dissatisfaction came from Downstate, where two-thirds of respondents were unhappy with the resources available there.

Such sentiment fueled 2020 ballot initiatives in 20 of Illinois’ 102 counties calling for their secession from the state, “ostensibly in order to free the rural areas from the burdens of Chicago,”

This data shows that facts don’t support that feeling – and demonstrates what harmful folly such a secession would be.

“It is clearly the case that the public’s perception of an issue may well not square with all of the empirical facts,” the researchers write. “People believe what they have been taught and … told – never mind what the factual basis for those beliefs are.”

The budget standoff between Republican Gov. Bruce Rauner and the Democratic-majority legislature in 2015-2017 probably contributed to increased aid Downstate.

“The two years without a state budget and the cuts entailed hurt Downstate, especially southern Illinois, harder than it hit northeastern Illinois,” Jackson told Kay Shipman of FarmWeek magazine. “Downstate, we do get a bigger part of our total revenues from the state.”

In Central Illinois, however, McLean, Peoria, Tazewell and Woodford Counties are “givers”; but Fulton, Henry, Knox and McDonough Counties are “getters,” according to the professors, who note that people – and politicians – sometimes trust claims that are verifiably false.

Civic engagement – at kitchen tables or taverns, campaign stops or legislative hearings – needs facts.

“The operation of a successful mass democracy depends in the long run on the people being well-informed and acting according to reality rather than inaccurate perceptions and myth,” the researchers say.