 Illinois netted a loss of 366,616 tax-paying households between 1995
and 2009, according to a study of Internal Revenue Service figures
from 1995 through 2009 released Tuesday by the Illinois Policy
Institute, a free-market think tank with offices in Springfield and
Chicago.Those households took with them $26 billion in taxable
revenue, according to the study. In 2009 alone, Illinois lost 20,725
households and their $1.5 billion in taxable income.
Ted Dabrowksi, vice president of policy for the institute, said
the recent tax hike might have been avoided, if those taxpayers had
remained in Illinois.
"If we had more people here generating income, generating sales
tax, hiring people, paying income taxes, we'd have a much better
fiscal outlook," he said.
Illinois lost taxpayers to 42 states during the 14-year period of
the study, including to the border states of Missouri, Iowa,
Wisconsin, Indiana and Kentucky.
The higher the net loss of taxpayers for Illinois translates into
a heavier financial burden for those who remain.
"This is not a study to say what exactly led to people leaving,
but we do note that taxes matter to people; a good, friendly
environment to business matters, bad deficits and a bad governance
matters to people; and people vote with their feet," Dabrowski said.
Moline is one of the two Illinois cities that make up the
Illinois-Iowa Quad Cities community. Moline is in Rock Island
County, which lost 1,013 taxpayers to Iowa for fiscal 2009,
according to the IRS.
"It's understandable. We haven't been able to get our act
together in the state of Illinois ... for a number of years," Moline
Mayor Don Welvaert said.
Illinois has seen two of its past three governors sentenced to
jail on charges stemming from corruption. During the past decade,
the state has made a habit of either skipping payments or borrowing
to make payments to its five pension funds and spending more than it
was taking in.
Welvaert said people leave the state mainly because of the
state's reputation.
In fact, Moline had the lowest cost of living of the four Quad
Cities before the state hiked its individual income tax by 67
percent in January, said Welvaert.
"It's perception more than anything. People look at the state of
Illinois -- our governors, our state Legislature -- and they want
nothing to do with it," Welvaert said.
Florida, Indiana, Wisconsin, Texas and Arizona had the largest
gains of former Illinois taxpayers, according to the study.
In general, people migrate because of big life changes, such as a
new job, retirement or family emergency, said Lisa Neidert, a senior
research associate at the University of Michigan's Population
Studies Center.
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Dabrowski said some people may have moved because of lower taxes
in states like Texas, which doesn't have a personal income tax.
However, jobs, not taxes, factored into 33,551 tax-paying
households leaving Illinois and moving to Indiana. During the time
period of the study, Indiana had a higher individual income tax at
3.4 percent before Illinois jumped from 3 percent to 5 percent, and
a sales tax of 7 percent compared with Illinois' 6.25 percent.
For the majority of the years in the study, unemployment in
Illinois hovered above the national average and was higher than that
in the five border states. Illinois' unemployment rate stands at 10
percent, while Indiana and the nation at large have unemployment
rates of 9 percent.
"Jobs are a big driver of migration, so you're going to move when
you've got a job opportunity, a better job opportunity, or you've
lost a job," Neidert said.
She said the institute's $26 billion figure is likely more than
Illinois' actual losses in taxable revenue.
Many people retire to Florida and Arizona, she said. Retirees'
taxable income generally drops a considerable amount, lessening the
amount the state would have gotten from them in taxes.
But the rate of people leaving Illinois has slowed in recent
years, likely as a result of the Great Recession. Highly mobile
middle-income earners are saddled with houses worth less than what
is owed on them, or the market makes selling a house a tough
prospect.
When that happens, people make do with what they have where they
are, Neidert said.
The study did show that Illinois netted 32,965 households from
seven states, including Michigan, New York and Pennsylvania,
bringing in $7.8 million in taxable revenue.
Just like states that took taxpayers from Illinois, Illinois
likely gained taxpayers from those seven states due to jobs, said
Neidert.
[Illinois
Statehouse News; By ANDREW THOMASON]
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