Illinois unraveling

Until the mid-1900s, people from across the world stampeded into Illinois in search of opportunity.

Workers from rural America came to build Pullman cars, erect skyscrapers and fill factories. Immigrants from Eastern Europe arrived in search of economic freedom. And laborers left the agrarian South to participate in America’s industrialization.

Illinois’ population doubled from 1900 to 1970, and the state’s economic and industrial grit, driven by Chicago, made it one of the largest economies in the world.

All that, however, is beginning to unravel. For the first time since the days of the Old West, the in-migration trend has come to a halt, and Illinoisans are fleeing their own state.

According to data from the U.S. Census Bureau and the Internal Revenue Service covering 1992-2010, Illinois ranked as the third-worst state for net loss of population to other states, behind only California and New York.

During that time period 350,000 more taxpayers left Illinois than moved into it. Including their dependents, the state lost a net of more than 900,000 people.

That’s the equivalent of wiping from the map Illinois’ six largest cities, excluding Chicago.

Illinoisans have fled to other states where their dreams and incomes are treated more kindly, and where opportunities are more plentiful.

Florida, Wisconsin, Arizona, Indiana and Texas are the top five states to which Illinois has lost the migration battle.

Year after year, while pro-growth, no-income-tax states such as Texas and Florida see their economies boom, Illinois loses both people and the money they earn to other states.

Between 1992 and 2010, on net Illinois lost nearly $30 billion in annual taxable income due to workers leaving the state.

Illinois was the third-biggest loser of taxable income in the country during this time period.

If that money had stayed in Illinois, it would have provided not only an economic boost, but also additional tax revenues to help lower Illinois’ tax rates.

Nearly $7 billion of Illinois’ lost taxable income went to Florida alone. The Sunshine state netted a total gain of more than $95 billion from other states.

And Illinois didn’t just lose to the more competitive southern states. It also netted population and taxable income losses to every one of its neighboring states during that time period.

Quite simply: Illinois’ failed public policies have created an economic environment that’s causing its residents to flee.

The state’s economic future is at stake.

For Illinois to thrive, leaders must enact serious tax and spending reforms, as well as take cues from those states that are far outperforming it.

But as states such as North Carolina and Wisconsin debate joining the ranks of the nine states that have no income tax, Democrats in the Illinois General Assembly are pushing for even more tax revenues through a progressive tax-hike scheme.

That plan, coupled with crumbling state pensions and rampant cronyism, makes Illinois an undesirable location for companies and the thousands they employ.

More taxes are not the solution to Illinois’ ills. The nonpartisan Tax Foundation already ranks Illinois’ property taxes the second-highest in the nation, and its state and local tax burden the 11th-highest.

Instead, Illinois must join states such as Wisconsin and Indiana in taking the tough steps toward real tax, spending and labor reforms.

If not, the exodus will increase. And nobody will be left to pay the bills.

Ted Dabrowski is Vice President of Policy for the Illinois Policy Institute.