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 When people relocate they take their wallets with them. That’s
a big problem for Illinois, which is experiencing record-breaking losses of
residents to other states.
Thankfully, the Internal Revenue Service measures these flows of adjusted gross
income, or AGI. And the IRS data show the Land of Lincoln lost $3.4 billion in
AGI to neighboring states on net from tax years 2010-2015, after adjusting for
inflation.
In tax year 2015 alone (2015-2016), Illinois lost $4.75 billion
in AGI on net to all other states. But more than 15 percent of those net losses
went to neighboring states, totaling more than $720 million. In fact, Wisconsin
and Indiana place among the top 10 gainers of Illinois income since tax year
2010.
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Much of Illinois’ core tax base is increasingly hoofing it out of
state. This presents a challenge for policymakers in Springfield
who’ve neglected to get state spending under control, opting instead
for quick-fix tax hikes to plug the state’s structural budget
shortfall. Not incidentally, Illinoisans cite taxes as the No. 1
factor for wanting to leave the state, according to a 2016 poll from
the Paul Simon Public Policy Institute.
And it’s not just the state level. Local governments across Illinois
continue to hike property taxes to make up for budget shortfalls, to
the point where property taxes have grown six times faster than
household incomes in Illinois. That’s caused the property tax burden
Illinoisans face to rise by 38 percent.
If lawmakers don’t take steps to reduce the largest tax Illinoisans
pay – property taxes – residents can expect to see even more money
walk out of the state.
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