The residents of nine states are getting an income tax cut beginning this year. Three of those states share a border with Illinois.
These changes are part of the continuing push since the Covid Era when states found themselves flush with Federal Pandemic Funds. Lowering taxes give those states a competitive edge when competing for new businesses and residents.
In doing this, they actually build their tax base. The neighboring states that are lowering their taxes include the following…
1 – Indiana is reducing its rate from 3.05% to 3%.
2 – Iowa is changing its system to a flat tax rate of 3.8%. Their current graduated income tax system has a top rate of 5.7%.
3 – Missouri is reducing its rate from 4.8% to 4,7%.
It should be noted that all three of these states have Republican Governors and GOP Controlled Legislatures.
Opponents of these tax cutting measures look to the fact that Illinois’ population actually increased by over 67K residents in 2024. Proponents of these measures remind us that Illinois’ population actually decreased in the four years prior to 2024.
Let me leave you with this…
One of the electives I took as an undergrad was a course at DePaul that discussed the political consequences of taxation. The course had two themes that were repeated over and over.
First was the fact that voters vote with their feet.
Throughout history, when the leaders of any government institute taxes that are considered either unfair or overburdensome, a portion of that population will move. And where do they go?
To a place where the taxes are neither unfair nor overburdensome.
The second message the course taught was that the people leaving that place were normally the ones who owned businesses and the methods of production. Historically speaking, it was the one percenters of their generation who paid the most taxes who left first.
In doing this, the jobs associated with those businesses also left. The higher taxes ultimately had the unexpected result of lowering the overall revenues going into government coffers.
These are basic historical facts that are indisputable given the empirical evidence.
Where you land on this issue probably depends on your political leanings. But all of that could change the very moment I hand you your income tax return. Whether you’re happy or sad when you see it, please remember one thing.
We will always do whatever we can to legally reduce your income tax responsibilities. Other than that, please don’t shoot the messenger.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
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