According to the US Census Bureau, Illinois had 141,656 residents who moved to another state in calendar 2022. 68% of those migrants chose a state with significantly lower taxes.
The top five states that drew our residents had a total effective tax rate below 9.9%. The states receiving the most new residents, in order with the most new residents first, are Florida, Texas, North Carolina, South Carolina, and Tennessee.
Interestingly enough, Florida, while being the number one state where people moved, had a total effective income tax rate of 9.1%. Tennessee, being fifth on the list, had a tax rate below that of only 7.6%.
These percentages tell us that tax policy isn’t the only thing effecting a resident’s decision to move. Crime statistics, weather, job opportunities, and other factors must also be factored in to see a more complete picture.
Conversely, Illinois has a total effective tax rate of 12.9%. The only states where residents pay more taxes are New York at 15.9% and California at 13.5%. These states also lost significant numbers of residents with New York losing 300K and California losing 341K.
Let me leave you with this.
Another high-profile income tax evasion case is currently being adjudicated in Chicago at the Kluczynski Federal Building. Alex Acevedo, son of a long-time State Legislator, is being tried for not including income he received from his brother’s lobbying business.
One of the differences about this case is that it isn’t about millions of dollars. They’re trying Mr. Acevedo because he failed to report a total of $70K on three consecutive income tax returns. The total tax he would have paid was only around $20K.
It doesn’t take much.
Entrepreneurs who think they can take a little here or maybe report a little less there should take note. The amount has little or nothing to do with whether or not you’re prosecuted.
It’s the act itself that matters.
By the time Mr. Acevedo is done, he’ll probably have paid at least three or four times the total amount he took in between defense attorneys, additional taxes, interest, and penalties. Let’s not forget the jail time he’ll probably be forced to serve over a lousy 70 G’s.
The fact that the government is going to the expense of having a trial in the first place is the part that surprises me. These cases are normally open and shut situations that end in a plea bargain.
They prove you received the money and pull out your tax returns, showing that the money wasn’t included on the tax returns. Guilty. Over. Done, Fagetadit.
Put it out of your mind. Don’t do it. And for the sake of whatever God you pray to, if you’re going to make this mistake, please find another accountant.
There are only two common instances in tax law where you have a taxable gain, and aren’t required to pay income tax now that we’re no longer handling PPP Loans. They’re the proceeds of a life insurance policy and the sale of a primary residence where the capital gain is less than $250K per member of a marital estate.
Report your income. File and pay your taxes timely. Stay in the game so you can make more money. And don’t become the next contestant on that fun-filled family show so aptly named, “Don’t Drop The Soap.”
Your proctologist will thank you.
We’re all going to get through this. Let’s get through it together.
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