 Personal income is growing much faster in Indiana than Illinois. But it doesn’t
have to be that way. Illinois has several advantages over Indiana, including a
global city – an important asset at a time when large cities are increasingly
important as economic engines.
Illinois should at least be on par with Indiana’s growth rate. And one of the
biggest differences between the two states is that Indiana’s government has
spent the past decade focused on economic growth and job creation, while
Illinois’ has not.
Illinoisans would have an additional $38 billion of personal income each year if
the Land of Lincoln had simply matched Indiana’s income growth over the past
decade. That additional income would translate into more than $4.2 billion of
annual state and local tax revenue.
Personal income has grown by only 2.8 percent per year in Illinois, compared to
3.4 percent per year in Indiana. That might not seem like a big difference for
one year, but that difference adds up over time.
From 2006 – 2016, personal income grew by nearly 39 percent in Indiana compared
to just over 31 percent in Illinois, according to the Bureau of Economic
Analysis.
Illinois’ total personal income was $667 billion in 2016. However, if Illinois
had grown like Indiana from 2006 – 2016, Illinois’ personal income would have
grown to $705 billion in 2016.
The difference is $38 billion of annual personal income that Illinoisans would
earn if Illinois had kept pace with Indiana.illinois indiana personal income
growth
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More personal income means more jobs, higher wages and more tax
revenue. The Tax Foundation calculates that Illinoisans pay 11
percent of their personal income in state and local taxes. That
means that state and local governments would have an additional $4.2
billion in annual tax revenue if Illinois’ growth had been in line
with Indiana’s over the last decade.
Springfield politicians should take a page out of former Indiana
Gov. Mitch Daniels’ book if they want to allow for the type of job
creation and income growth that Indiana is achieving. Daniels
changed Indiana’s policies to prioritize taxpayers, job creation and
income growth over government bureaucracy and excessive regulation.
If Illinois does similar reforms, then the Land of Lincoln will
experience similar results. Illinoisans will achieve additional
billions in annual income growth that the state is currently
frittering away by driving out businesses, maintaining an expensive
government bureaucracy, and suffocating growth with red tape.
A brighter future for Illinois begins with an honest assessment of
what’s gone wrong in the Land of Lincoln, and what’s working in
nearby states. If Illinois’ can achieve Indiana’s income growth
levels, then additional billions of dollars in tax revenue will flow
in and Illinois’ problems will become much easier to solve.
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