Illinois is losing residents who are fleeing the state for greener pastures. And lower taxes in other states. It’s like voting with your feet. Why keep paying through the nose if neighboring states will let you keep more of your own money?
From the Wall Street Journal:
Illinois Drives People Away
The Prairie State lost a record $4.75 billion in adjusted gross income to other states in the 2015 tax year, according to recently IRS data released. That’s up from $3.4 billion in the prior year. Many of the migrants were retirees who often flock to balmier climes. But millennials accounted for more than a third of the net outflow in tax returns.
While Florida with zero income tax was the top destination for Illinois expatriates, the Illinois Policy Institute notes that Illinois lost income and people on net to all of its neighbors – Wisconsin (6,000 people based on claimed exemptions), Indiana (8,200), Iowa (1,900), Missouri (2,000) and Kentucky (1,100). What’s the matter with Illinois?
[S]uffice to say that exorbitant property and business taxes have retarded economic growth. Illinois’s corporate tax rate is 9.5%, and pass-through business owners pay 6.45%. Though Illinois’s flat 4.95% income tax rate is relatively low compared to its neighbors, Democrats have found other ways to clobber their citizens.
Property taxes in Cook County and Chicago’s “collar” counties are the highest in the country outside of California and the Northeast. The average homeowner who moves from Lake County, Illinois, across the border to Kenosha County, Wisconsin would receive an annual $3,200 annual property tax cut. Taxes may increase as Democrats scrounge for cash to pay for pensions. Fitch Ratings reported this week that Illinois’s unfunded pension liabilities equalled 22.8% of residents’ personal income last year, compared to a median of 3.1% across all states and 1% in Florida.
If Illinois lowered taxes they would be more competitive. People might even move there rather than flee from it.