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There seem to be some misconceptions here about the taxes you pay when you work and live in different states.
Some states have reciprocity agreements where your employer will directly take out the payroll taxes from the state that you live in. Illinois has an agreement like this with Wisconsin and even Michigan (I met a girl at Millennium Station once who was actually commuting from Michigan so there are people out there like this!), and they used to have one with Indiana but it expired many years ago and Illinois refused to renew it.
Now if you live in Indiana and work in Illinois, the taxes your employer takes out of your paycheck will be the amount from Illinois. However, when you file your taxes, you will get this money back and will then have a tax bill you have to pay to the state of Indiana.
I'm not googling sources on this for you, but I lived in Indiana and worked in Illinois (for an employer based in Illinois) for a little over two years and that's how it worked.
As far as paying sales tax to Illinois, this is easily avoided. Again, I commuted in to the loop for two years and I can count the number of times I bought lunch out on one hand. If you can't be bothered to make your lunch and go out to eat every day, then you must have tons of money to blow. If you're trying to save money or live frugally and go out to lunch every day, you're doing it wrong.
Thanks Bridget Jones. I keep an office downtown and work from home in Munster 3 days a week. My company is based out of DC and my pay stubs show my residence in IN. I am only taxed in Indiana.
On the lunch piece, I am am a consultant. My time is very valuable. I would actually lose money making a lunch as opposed to buying one when I head downtown....Time is money...Time is money...
And once the CDC publishes the report on its investigation triggered by the affluent Palo Alto high schools experiencing suicide rates 4-5x the national average, I'll update this thread.
Aren't the Western Suburbs of IL on the so called Heroin Highway? I've heard terrible things about the heroin problem in Hinsdale and Naperville schools.
Most folks in NWI may be tired of the increasing costs of Chicago area, but also MOST of us are not cheering for the demise of Chicago or Illinois...we are clearly aware that it would have a negative impact on Indiana as well, mostly in NWI.
Most of us are not like that "Move to Indy" fool on Facebook who acts like there is a large wall between Indiana and Illinois. Many of us, if not, most of us in NWI have family and friends just across the border whom would be devastated if the state went completely down the toilet...who would like to see that? Surely not I.
At the same time, most of us also may come off as defensive because a lot of what is said about NWI is ignorant at best and just downright idiotic at worst. Yes, NWI overall is not a north shore, Hinsdale/Oak Brook, etc. But for the MAJORITY of Chicagoland area residents, the decent areas of NWI are not much different in aesthetics and amenities than their own areas.
Like I said in a post before, YEARS ago, most of the growth in NWI was from middle class/lower middle class residents from places like Dolton, South Holland, Calumet City, Riverdale, Harvey, etc. Many of these residents (mostly from South Holland and some Lansing) had money to spend to build nice houses and they did so in Indiana...the vast majority of people would agree that places like Munster, Highland, Dyer, Schererville, and Saint John have a lot more to offer than Calumet City, Dolton, South Holland, and Harvey....however, during this time, many people were also moving west to Orland, Tinley, Mokena, Frankfort and would have NEVER been caught dead looking at Indiana...now? Some of those same folks are now moving to Indiana.
If for nothing else, moving to Indiana would at least allow for more disposable income while being able to keep a Chicago job until someone is ready to leave the midwest entirely. I do know of a couple people (closer to retirement age) that did just that. They were on a 10 year plan to reduce their costs and moved from IL to IN and now they are in AZ (although AZ has been getting pricier and it is blamed on CA and IL residents arriving in droves).
I think one thing getting lost in the discussion is how affluent C-D skews. I make around 50% more than the median income for men in Indianapolis, so by that measure, I'm doing pretty well, yet I make a small fraction of what some of the posters on here make.
If you're making $200,000+, I don't have a lot of sympathy if your property taxes go from $15,000 to $20,000 annually - you can afford it, and if you don't like it, you can find somewhere else that suits you better. The poor are going to be taken care of in Illinois as long as it remains a Democrat stronghold. The middle class are going to be the ones that end up on the raw end of this - couples making $80k-$120k or so that want to own a home, but where property taxes in IL and increasing taxes on the table are making that prohibitive.
For that market, no, I don't think you'll see much daily difference living in northwest IN. These people aren't shopping at Bloomington's or living on the north shore. I think proximity to retail as an argument for living in IL is just not that big of a deal anymore (within reason) with great online shopping.
Still, for that $80k-$120k couple that is priced out of the Illinois suburbs, IN offers an alternative if they're committed to Chicagoland. If I was in that situation, I would be looking to leave for a variety of reasons, but I understand many people don't want to leave the area or can't on a short-term basis.
I think another thing that gets misunderstood is that IN is some low tax state - it isn't. It is Republican, but not low tax. Compared to IL, it's low tax, but overall, it's not. Lake County has an income tax rate of 1.5% for residents working in the county - add in the 3.4% for the state, and you're right on par with IL's 5%. The sales tax rate in the state is 7%. Car registration fees are high, gas taxes are high. Property taxes are lower than IL, but not as low as the other states I've lived in, save IA. I've lived and paid taxes in IA, SC, TN, VA, and IN, and IN was the second highest state of that bunch overall for me. If people are looking to seriously cut their tax burden, IN is still a fairly high tax state.
That is not the debate at all. I don't understand your point? No one wants Illinois or Chicago to suffer. The debate here is that Illinois is a mess and there is nothing wrong with choosing to live in NWI suburbs as opposed to Illinois surburbs because of the financial mess of Illinois. What is your point? Do you have one?
There is nothing wrong with living in IN but there has been a train of thought that if IL becomes a further basket case, that somehow NWI is going to become some haven from all that and prosper - it's not, it's going to have trouble.
I think one thing getting lost in the discussion is how affluent C-D skews. I make around 50% more than the median income for men in Indianapolis, so by that measure, I'm doing pretty well, yet I make a small fraction of what some of the posters on here make.
If you're making $200,000+, I don't have a lot of sympathy if your property taxes go from $15,000 to $20,000 annually - you can afford it, and if you don't like it, you can find somewhere else that suits you better. The poor are going to be taken care of in Illinois as long as it remains a Democrat stronghold. The middle class are going to be the ones that end up on the raw end of this - couples making $80k-$120k or so that want to own a home, but where property taxes in IL and increasing taxes on the table are making that prohibitive.
For that market, no, I don't think you'll see much daily difference living in northwest IN. These people aren't shopping at Bloomington's or living on the north shore. I think proximity to retail as an argument for living in IL is just not that big of a deal anymore (within reason) with great online shopping.
Still, for that $80k-$120k couple that is priced out of the Illinois suburbs, IN offers an alternative if they're committed to Chicagoland. If I was in that situation, I would be looking to leave for a variety of reasons, but I understand many people don't want to leave the area or can't on a short-term basis.
I think another thing that gets misunderstood is that IN is some low tax state - it isn't. It is Republican, but not low tax. Compared to IL, it's low tax, but overall, it's not. Lake County has an income tax rate of 1.5% for residents working in the county - add in the 3.4% for the state, and you're right on par with IL's 5%. The sales tax rate in the state is 7%. Car registration fees are high, gas taxes are high. Property taxes are lower than IL, but not as low as the other states I've lived in, save IA. I've lived and paid taxes in IA, SC, TN, VA, and IN, and IN was the second highest state of that bunch overall for me. If people are looking to seriously cut their tax burden, IN is still a fairly high tax state.
+1, There's a big misconception about this. Granted comparing Chicago or Cook County to NWI there is a savings but overall it's an overall savings of 1% of annual income for most people between the two states. Sales tax on the state level is actually higher in IN-7% to IL-6.25%.
There are talks to lower the Lake County income tax but who knows if that is just election cycle rhetoric.
I have already explained that the effective property tax rate in Hinsdale is comparable to Munster and Hinsdale schools receive very little funding from the state. Besides it appears state legislators are finally making progress:
So it looks like IL is bailing out CPS to a degree and taxes in Chicago are going up again to a degree. Seems reasonable and right in line with my thoughts that taxes would need to be going up in IL and Chicago.
IMO, Chicago and other poor districts will still continue to clamor for changes to school funding and IL will need to provide more financial assistance b/c nobody is going to stand for not allowing a child go to school. Especially in a liberal state like IL.
In the end, someone has to pay deficits in poor/failing districts and poor people don't have money. So, who do you think will be on the hook? Check out the map on this NPR article. Basically, at a glance it shows the disparity in spending across school districts. The more variety in colors you see, the more disparity.
There is certainly more potential for more redistribution of wealth in IL based on this visual example which will is being used by the left on how current funding isn't fair. Liberal states like to redistribute wealth, right? Somebody is going to have to pay the bills. Hinsdale may not need money from IL for schools but IL will need money from Hinsdale residents for ill-funded school districts.
An interesting article on migration trends out of IL.
+1, There's a big misconception about this. Granted comparing Chicago or Cook County to NWI there is a savings but overall it's an overall savings of 1% of annual income for most people between the two states. Sales tax on the state level is actually higher in IN-7% to IL-6.25%.
There are talks to lower the Lake County income tax but who knows if that is just election cycle rhetoric.
What someone in downstate IL pays really doesn't mean much to someone in Cook County - you pay taxes to the tune of whatever locality you're in - some handpicked example at some far-flung corner of the state as a comparison is meaningless. I think the total sales tax burden between state and local sales taxes in Chicago is around 10%. Granted, other states like TN and WA get around that level, but neither have an income tax or that level of property tax. Also, with sales taxes, you can at least throttle your consumption to adjust to that higher tax level or, in some cases, dramatically reduce that burden. I grew up eight miles from the Virginia border in Tennessee and the Sam's Club in Virginia would be filled with Tennessee plates on the weekends with people loading up at a sales tax savings of 5%. Income taxes and property taxes are harder to avoid paying. The difference between IL and IN sales tax rates is probably not worth the hassle of sitting in traffic, paying tolls, etc., unless it is a major retail purchase.
IN has a major problem with variability in county income tax rates. Here in Hamilton County, the income tax burden is just 1%. In nearby Madison County, a much less affluent area in need of reinvestment, the income tax rate is 3%. That's a flat nearly 6.5% in state and local income taxes for residents there - that's a big burden, and IMO, a big reason why you're not seeing as much redevelopment out that way as you might otherwise expect. By the time you pay that 6.5% in state and local income taxes, middle of the road property taxes, 7% in sales tax, IN's ridiculous vehicle registration fees (they say we have no personal property tax, but the registration fees are a higher burden than VA's personal property tax/inspection fee), and anything else that gets tacked on, I don't see how any reasonable person could call IN "low tax," and Lake County in particular gets another pound of flesh with higher property taxes.
+1, There's a big misconception about this. Granted comparing Chicago or Cook County to NWI there is a savings but overall it's an overall savings of 1% of annual income for most people between the two states. Sales tax on the state level is actually higher in IN-7% to IL-6.25%.
There are talks to lower the Lake County income tax but who knows if that is just election cycle rhetoric.
+1, There's a big misconception about this. Granted comparing Chicago or Cook County to NWI there is a savings but overall it's an overall savings of 1% of annual income for most people between the two states. Sales tax on the state level is actually higher in IN-7% to IL-6.25%.
There are talks to lower the Lake County income tax but who knows if that is just election cycle rhetoric.
Don't we have some good news to look forward to with IN state income taxes set to go down? And also, don't we have a balanced budget and aren't we in the black (not red)? To me, this means less potential for additional increases.
Also, I guess with regard to sales tax, it felt like a big decrease out in NWI as Chicago sales tax was a whopping 10+%. I believe it is the highest in the nation. Plus no tax on Food in IN was really nice change.
I get what you are saying though. There are lower cost states to move to if you can. Guess that is why my Chicago Police Dept friend is moving to AZ and not IN despite the fact family is all still in IL. To me, moving away from family is not on the table so NWI is a much better compromise.
Don't we have some good news to look forward to with IN state income taxes set to go down? And also, don't we have a balanced budget and aren't we in the black (not red)? To me, this means less potential for additional increases.
Also, I guess with regard to sales tax, it felt like a big decrease out in NWI as Chicago sales tax was a whopping 10+%. I believe it is the highest in the nation. Plus no tax on Food in IN was really nice change.
I get what you are saying though. There are lower cost states to move to if you can. Guess that is why my Chicago Police Dept friend is moving to AZ and not IN despite the fact family is all still in IL. To me, moving away from family is not on the table so NWI is a much better compromise.
IN has one of the fiscally healthiest state governments in the country. Yes, there have been some nominal income tax reductions, but so far, I think it's been less than 10 basis points over wherever they started. I think there are more to come, but again, very nominal.
Your third paragraph has been my point all along. If you're dug into the Chicagoland area and cannot leave, NWI is probably your cheapest and lowest tax option. If you can leave, there are plenty of areas in the country where a person can have a similar suburban lifestyle to what you'd find in NWI outside of some other major city at a lower cost. Yes, IN/NWI is relatively low cost/low tax compared to Chicagoland, but it's still probably on the high side of average for the rest of the country.
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Will Be Interesting to Watch
