As a whole, the suburbs are more giving than Chicago and much of downstate when it comes to redistribution of income taxes, but individually the suburbs are a mixed bag, based on a Daily Herald analysis of Illinois Department of Revenue and U.S. Census Bureau data.
That’s because taxes are paid to the state based on wages earned, but the amount returned from the state is a fixed amount per resident…
This state’s income tax redistribution policy means some suburban areas like parts of Aurora got back more than 25 percent of what residents paid in income taxes, while other areas like Oak Brook and Barrington received less than 2 percent of the income taxes workers there paid…
Taxes on higher incomes cover not only the local share but also a bigger portion of the cost of operating the state. The distribution of the income taxes helps ensure all parts of the state have the resources to operate effectively, experts said.
The article makes it sound as if the experts generally agree that this is the way it should work: income taxes are paid and then the money redistributed to help provide services for others. Yet, isn’t this sort of analysis suggesting that this may not be “equitable”? The real question lurking here is what would be equitable and whether people should be getting back in services exactly or close to what they paid in. There is some disagreement here, illustrated by one Oak Brook official:
“Every municipality hopes to receive more than it currently does,” said Art Osten, Oak Brook’s interim village manager. “The reality is that the distribution of taxes collected by the state is a political question. We hope the determination of need and reallocation is done in a reasonable and equitable manner and that Oak Brook receives its fair share of what its residents contribute.”
On one hand, communities all want more tax money back and discussions in Illinois to lower the amount returned to municipalities would be met with resistance. On the other hand, Oak Brook wants its “fair share.”