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 Illinois’ problem with wealth flight
isn’t just persisting, it’s getting worse. That’s the takeaway from new data
released by the Internal Revenue Service on Nov. 30. In terms of both people and
income, the Land of Lincoln saw a record-breaking exodus in the 2015 tax year
(2015-2016).
Illinois saw a net loss of nearly 42,000 tax returns to other states on the
year, representing a net loss of more than 86,100 people (measured in
exemptions), according to the IRS. That’s an all-time high.
And when people leave the state, they don’t just take their talent, drive and
ingenuity. They take their wallets, too.
 Illinois lost $4.75 billion in adjusted gross income, or AGI, on net to other
states in tax year 2015. That’s also an all-time high. While residents saw $6.35
billion in adjusted gross income, or AGI, move into Illinois from other states,
$11.10 billion moved out of Illinois to another state.
It’s not retired snowbirds who are driving the flight from Illinois. Analysis of
IRS data for previous years shows how millennials are in fact leading the
Illinois exodus. Further, the most recent IRS data show Illinois lost income and
people on net to every neighboring state. It’s not just the weather.
To where exactly are people walking?
The top 10 states to which Illinois lost people were: Florida (12,800 exemptions
gained from Illinois on net), Texas (9,400), Indiana (8,200), California
(7,600), Arizona (6,400), Wisconsin (6,000), Colorado (4,700), Georgia (4,200),
Tennessee (3,600) and North Carolina (2,700).
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Since the 2011 temporary
income tax hikes, the flight of wealth and people from Illinois has
accelerated.
This consistent,
worsening trend is an indictment of the policy status quo in
Illinois. A 2016 Paul Simon Public Policy Institute poll found
Illinoisans cited taxes as the No. 1 reason for wanting to leave the
state. And while Illinois’ temporary income tax hike partially
sunset at the start of 2015, left to run wild was the largest tax
Illinoisans pay: property taxes. Illinoisans shoulder the heaviest
property tax burden in the nation, according to a 2016 study from
real-estate services company CoreLogic.
Yet for years, Springfield has rejected any substantial reforms to
address the cost-drivers behind those property tax bills: the
highest number of local governments in the nation, skyrocketing
local pension costs and an unfair bargaining regime that stacks the
deck against taxpayers in negotiations, to name a few. Proposals for
a hard property tax cap have been rebuffed as well.
Of course, taxes aren’t the only reason people are leaving. The
state’s laggard economy, evidenced by legions of Illinoisans
dropping out of the workforce altogether, is another likely culprit.
Illinois’ exodus of people and money is the state’s most pressing
policy problem.
Until lawmakers get serious about addressing its causes, there’s
little reason to think the trend will change.
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