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New IRS data: Illinois lost migration battle with every state in the country

MADISON - ST. CLAIR RECORD

Sunday, December 22, 2024

New IRS data: Illinois lost migration battle with every state in the country

Illinoisans have voted with their feet. The winner? Anywhere else.

The Land of Lincoln lost head-to-head migration battles with every single state plus Washington, D.C., in tax year 2011, according to new taxpayer migration data released by the Internal Revenue Service on July 31. The 2011 tax year was the first year of Illinois’ historic income-tax hike, when the state raised the income-tax rate by 67 percent.

Illinois lost 24,000 taxpayers along with 26,000 dependents on net that year, for a total net loss of 50,000 people to other states. And when these taxpayers left, they took their incomes with them. The net loss of adjusted gross income for the state of Illinois was $2.5 billion in the 2011 tax year. Illinois’ loss of annual income jumped by $600 million from the 2010 migration data, when Illinois had a net loss of $1.9 billion.

Those who left Illinois tended to make more money than those who entered the state. The average adjusted gross income of those who left Illinois was $63,100, compared to an average adjusted gross income of $53,500 for those who moved into Illinois. So not only was Illinois losing more taxpayers than it gained, but those who left Illinois earned 18 percent more than those who came in.

However, the really shocking news from this IRS data release is the fact that Illinois lost residents to every single state plus Washington, D.C. The historical trend was for Illinois to lose people to 43 of 49 states but gain a few people from Rust Belt peers such as Michigan and Ohio, as well as New Jersey. That trend appears to have changed. Illinois hit a new low and lost people to every other place in America, with the biggest losses being to Sun Belt states and surrounding states.

The loss of taxpayers and their dependents was largely correlated with the loss of annual income. Illinois had a net loss of annual income to 40 out of 50 states plus Washington, D.C. All border states gained income from Illinois, and the top 10 recipients of Illinois earnings include large states such as Florida, California and Texas, but also neighbors such as Indiana, Wisconsin, Michigan and Missouri.

This new data release can be described as nothing other than a complete embarrassment for Illinois. It’s only possible for one state to sweep the board by losing taxpayers and their dependents to every other state, and that sorry distinction goes to Illinois. To lose people to every state is a resounding no-confidence vote in the status quo.

It’s not surprising then that a population so disenchanted in that status quo voted to change leadership at the top by electing Gov. Bruce Rauner. It’s also not surprising that the reforms proposed by Rauner, which are completely in line with what neighboring states have been doing, are perceived as such a major shift by the long-term leadership of the Illinois General Assembly. Those leaders, particularly House Speaker Mike Madigan and Senate President John Cullerton, have shepherded decades of misguided policies that drove up debt and pushed out taxpayers.

There’s a reason Illinoisans took an “anywhere but here” approach to their beloved home state as early as 2011, many years before Rauner was even a candidate for governor. Illinois’ legislative bosses should take note of the fact that every other place in the country is being chosen over the turf they control. If they care to change that, Rauner’s five clear legislative reforms are on the table, waiting to be called for a vote.

Note: IRS migration data should not be confused with U.S. Census Bureau migration data. The IRS data are an important input for the Census Bureau’s data, but the census data usually show larger changes in the number of people moving. This is because IRS data capture only taxpayers and their dependents, while the Census Bureau also estimates the movement of people who are not filing taxes, such as new students out of college.

Michael Lucci is Director of Jobs and Growth for the Illinois Policy Institute. 

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