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Illinois Taxpayers Flee to Greener Pastures

Aug 21, 2014

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Recently, Wendy and I wrote a study on the flight of Illinois taxpayers to greener pastures called "Policy Lessons From Illinois' Exodus of People and Money" (pdf) for the Illinois Policy Institute.  Here are the key findings:


Key findings of this report include:


  • Illinois lost people and income in 2010, the most recent year of IRS data. Illinois’ net loss was 49,142 people and nearly $2 billion in annual income. The largest net loss of people was to Texas. The largest net loss of income was to Florida.

  • Illinois has lost people and income in every year from 1995-2010. The state sustained a net loss of 855,196 people and $35.4 billion in annual income from 1995 through 2010. The top states that gained people from Illinois during this time period were Florida, Indiana, Wisconsin, Texas and Arizona.

  • Illinois is losing the “border wars.” In the 2010 tax year and over the 16 years of the study, Illinois lost people and income to all five of its neighboring states.

 


  • State and local governments lose billions in tax revenue due to out-migration. State and local governments lose $6 billion in annual tax revenue as a result of the 16 years of out-migration highlighted in this study. The compounded loss of tax dollars over 16 years is $52 billion.

  • Out-migration has accelerated. U.S. Census Bureau data, which provide a broader view of out-migration, show that the loss of people due to net out-migration increased from 60,000 in 2010 to 70,000 people in 2011. The number of people migrating away from Illinois has remained constant at an elevated level since then.

 

 

Recently, a ABC 15 in Chicago did a fascinating story on the migration study which really puts these numbers into a real-world perspective. The video is below, but I've pasted the text as well.

 

"My friend's step parents just moved to Indiana." People on the move. "Some of my coworkers, two of them now. One's moved to South Carolina and the other one's looking at moving there." It seems everyone knows someone. "My cousin moved down to Indiana." Leaving Illinois.


A newly-released study from the Illinois Policy Institute confirms what many seem to already know: People are looking elsewhere for healthier economic climates. Jessica Irace says, "It was easier for her to get a job and it was less of her paycheck they would take out. She felt like she could earn more money and support her family better."


In 2010 --the most recent year of data-- more than 4,000 people left Illinois for Indiana than vice versa. "She just left illinois to go there because of the tax rate." "There were better taxes and she could get a job easier." Add up every state coast to coast, and nearly 50,000 people left Illinois, taking with them nearly $2 billion in annual income.


John Joyce says, "I see the problem with Illinois as I don't see how they're going to resolve the financial situation in Illinois without tax increases." And the problem isn't just affecting individuals. "With the business climate in Illinois it's actually going the other way. I have a good friend who has a large company here in town who wishes when he was starting out 25 years ago that he stayed in Indiana. He'd be wealthier now."


So how do we fix the problem? The government seems to be struggling for answers, and so are the people. Joyce says, "I don't see how they're going to do it. We have too much debt, teacher's pension fund, things like that are insurmountable, almost." Irace says, "I lived in Missouri and I just moved back here. And my paycheck was way better in Missouri than it is here."






J. Scott Moody

J. Scott Moody has nearly 20 years experience as a public policy economist with a specialty in tax policy and has over 180 publications. He has worked for numerous national and state-based think tanks such as the American Conservative Union Foundation, Federalism In Action, Tax Foundation, Heritage Foundation, and The Maine Heritage Policy Center.


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