Illinois celebrated its 199th birthday Dec. 3. The eventual Land of Lincoln first became a state in 1818.
Back then, nearly all of Illinois’ fertile prairie was left unsettled. But it seems like Springfield is doing its best to return to that remote state, according to new data from the Internal Revenue Service.
The IRS data dump Nov. 30 was a crummy birthday gift. But it underscored the biggest policy problem with which state lawmakers must reckon in Illinois’ bicentennial year: flight.
In the 2015 tax year (2015-2016), Illinois sustained record losses of both income and people to other states.
Illinois saw a net loss of nearly 42,000 tax returns to other states on the year, representing a net loss of more than 86,100 people (measured in exemptions) according to the IRS. That’s an all-time high.
And when people leave the state, they don’t just take their talent, drive and ingenuity with them. They take their wallets, too.
Illinois lost $4.75 billion in adjusted gross income, or AGI, on net to other states in tax year 2015. That’s also an all-time high. While residents saw $6.35 billion in AGI “walk in” Illinois from other states, $11.1 billion “walked out” of Illinois to another state.
Care about a balanced budget? Improved infrastructure? Adequate social services? One must care about the continued erosion of Illinois’ tax base due to outmigration then, too.
Now, to dispel a couple of myths: It’s only retirees, and they’re leaving because they hate the weather.
First, analysis of the same IRS data show millennials are the ones leading the Illinois exodus, not the elderly. And second, if the weather is so bad, how come Illinois lost people and income on net to every neighboring state?
The Prairie State lost 21,800 residents to neighboring states in 2015-2016, measured in exemptions. Indiana led the pack, netting 8,200 Illinoisans. Illinois also lost more than $720 million in AGI on net to neighboring states. Wisconsin saw the largest net gain, with $253 million.
It’s true that Illinois has had a people problem for decades. But the exodus accelerated in the wake of the 2011 temporary tax hikes. And it hasn’t slowed down.
This consistent, worsening trend is an indictment of the policy status quo in Illinois. The Paul Simon Public Policy Institute found in 2016 that nearly half of Illinoisans wanted to leave the state. Pollsters asked why. The No. 1 response? Taxes.
And while Illinois’ temporary income tax hike partially sunset at the start of 2015, left to run wild was the largest tax Illinoisans pay: property taxes. Illinoisans shoulder the heaviest property tax burden in the nation, according to a 2016 study from real estate services company CoreLogic.
Yet for years, Springfield has rejected any substantial reforms to address the cost-drivers behind those property tax bills: the highest number of local governments in the nation, skyrocketing local pension costs and an unfair bargaining regime that stacks the deck against taxpayers in negotiations, to name a few. Serious proposals to protect homeowners from skyrocketing bills have been rebuffed as well.
And in the face of this outmigration problem, Illinois lawmakers passed the largest permanent income tax hike in state history in July.
Of course, taxes aren’t the only reason people are leaving. The state’s laggard economy is another likely culprit. Nearly 100,000 Illinoisans have dropped out of the workforce this year alone.
Illinois’ exodus of people and money is the state’s most pressing policy problem. Until lawmakers get serious about addressing its causes, there’s little reason to think the trend will change.