 Illinois is home to the worst personal income growth in the United States over
the Great Recession era, and tax hike proposals in the Illinois General Assembly
would only make this worse.
Illinoisans have experienced income growth of only 0.8 percent per year from the
end of 2007 to the end of 2016. This leaves Illinois tied with Nevada and behind
even low-growth states such as Mississippi and Connecticut.
An exodus of income-earning power from the state has accompanied Illinoisans’
flat paychecks and the state’s years of slow economic growth. Hundreds of
thousands of Illinois income-earners have been leaving the Land of Lincoln in
search of better opportunities in other states.
While Illinoisans have seen anemic personal income growth over the last nine
years, the average U.S. state has doubled Illinois’ income growth rate, and
neighboring Indiana has done even better than that. Hoosier income has grown 1.8
percent per year, compared to 0.8 percent in Illinois.
This economic data
might come as a surprise to anyone paying attention to the tax debate in
Illinois, where state and local taxing authorities have treated Illinois
taxpayers like a bottomless well of new revenue.
Since the Great Recession ended, for example, large increases in local property
taxes and sales taxes have battered the average Chicago taxpayer. And across the
state, Illinois taxpayers saw their income taxes rise to 5 percent from 3
percent between 2011 and 2014.
In May, Illinois Senate Democrats passed $5.4 billion in new and higher taxes,
which would take an additional $1,125 from each Illinois household every year,
on average.
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But the taxpayer well is drying up. Illinoisans are struggling
with weak income growth more than any other state population in the
country. Rather than looking to take still more money from
taxpayers, political leaders should be working to prevent further
tax increases from swallowing up more of Illinoisans’ weak income
growth.
These economic facts are reflected in recent public polling that
shows Illinoisans are sick of taxes. A May Illinois Policy
Institute-commissioned poll revealed that 64 percent of Illinoisans
surveyed oppose income tax increases to balance the state budget.
After two years of a painful budget impasse, Illinoisans still
overwhelmingly oppose a tax hike to solve the problem.
And recent polling from the Paul Simon Public Policy Institute found
that the majority of working-age Illinoisans would prefer to leave
the state, and taxes are the No. 1 reason.
Public polling and economic data provide very clear guideposts for
Illinois lawmakers: Pass a balanced budget and don’t raise taxes to
do it.
The Illinois Policy Institute has proposed a budget plan to do
exactly that. Lawmakers and other interests groups should follow
suit and write a budget without a tax increase so that the next
budget deal will be a “grand bargain” for taxpayers instead of
another insider deal for the political class.
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