(Editor's note: This article was published first at Illinois Policy Institute)
Contrary to a new, misleading report, in the five minutes it takes you to read this article, one of your neighbors will have left Illinois and another is packing her bags.
Earlier this month, the Illinois Economic Policy Institute released a report allegedly to “provide clarity and context” to the conversation surrounding Illinois’ population decline. It provided the opposite.
| Illinois Policy Institute
Illinois’ population loss and outmigration crises have been continuously affirmed by data from the U.S. Census Bureau, IRS, as well as U-Haul, United Van Lines and Allied Van Lines moving companies. The new study’s authors offered misleading interpretations of the data – often contradicting themselves – and excluded other data to make incorrect claims about Illinois’ population.
Here are the five major things the Illinois Economic Policy Institute, known as ILEPI, got wrong about Illinois’ population story:
1. The Census Bureau does not claim Illinois’ population is growing as the study suggests.
The Census Bureau measures populations in two ways: annually through the Population Estimates Program and every 10 years during the official decennial census. Both of these extensive measures confirmed Illinois population is declining.
The estimate is the most comprehensive dataset on population change available. It constructs estimates of population change based on federal vital statistics data from the National Center for Health Statistics and Federal-State Cooperative for Population Estimates; domestic migration data from the Internal Revenue Service, Medicare, Social Security Administration and the Census Bureau’s Demographic Characteristics File for all ages; and international migration data from the American Community Survey, Puerto Rico Community Survey and the Defense Manpower Data Center. The decennial census is a headcount of individuals throughout the nation. Both found Illinois’ population is declining.
The new study claims Illinois’ population is not declining because of “faulty Census estimates instead of actual counts of people” and implies Illinois’ population has grown. That is incorrect.
The growth claim stems from the Post-Enumeration Survey – which is not an actual count of people, but a survey that covers 0.1% of the population nationally. It estimated Illinois’ population was undercounted during the 2020 Census. The survey does not change official census counts or attempt to estimate population change. It is simply a sampling, used by the Census Bureau to evaluate how well it conducted the decennial count and provide administrative guidance for future census counts.
It is also important to note the annual estimates of components of Illinois’ population change are likely still correct, as they are based on a wide variety of hard data sources and the Census Bureau has continued to estimate record population decline and out-of-state moves, even after the 2020 Census and post-enumeration survey. More specific details on the breakdown and differences in census products can be found here.
2. Data from state income tax returns shows Illinois’ population is declining – and the ILEPI study excluded it.
An entire section of the new report is dedicated to comparing differences between annual Census estimates and Illinois Department of Revenue data on state tax returns. They use the tally of the number of tax returns filed (which is not the same as total population) from 2010-2020 as evidence of Illinois’ population growth during the decade. The authors have problematically excluded the parts of that same dataset showing the number of individuals represented in the tax returns has declined substantially from 2010-2020.
ILEPI’s report contains a table showing growth of 200,143 Illinois tax returns from 2010-2020. But the number of tax returns filed is not representative of the number or individuals in the state. Many couples file jointly or have dependents who do not file their own tax return. The state tax data also includes the number of basic exemptions – a count of the number of individuals (filers and their dependents) – represented in the data, which shows Illinois’ total population declined by 354,759 people between 2010 and 2020. (Illinois eliminated basic exemptions for joint filers earning more than $500,000 and all other filers earning more than $250,000 in 2017, so we’ve re-added those figures to the data based on previous Illinois income tax returns).
While every Illinoisan is not required to file a state income tax return, these figures are similar to the Census Bureau’s original estimate of Illinois’ population decline of approximately 253,000 during the decade. The fact that not all Illinoisans file state income tax returns likely explains the bulk of the difference between the Census Bureau’s estimates of population decline and changes in state tax return data.
3. IRS data confirms population decline – ILEPI ignores this entirely.
Internal Revenue Service records also show population is on the decline and on net Illinoisans are moving to other states in large numbers. This further contradicts ILEPI’s claim that “actual counts of people” show Illinois population decline is overblown – and they ignore it completely.
Not only did ILEPI exclude state tax return data that contradict their claims, they completely ignore IRS data that includes more individuals and confirms Illinois’ population decline.
Similar to state tax return data, the IRS records the number of individuals represented within federal income tax return data for each state. That data shows between 2010 and 2020 the number of individuals counted within Illinois’ federal income tax returns declined by 847,950. These results confirm what state tax return and Census Bureau data shows: Illinois’ population is declining. Similar to state tax return data, because 32 million households (18%) nationwide don’t file federal tax returns, the exact amount of population decline varies, but consistently shows Illinois’ population is declining.
In addition to their counts of the total number of individuals, the IRS also keeps records on migration. Those confirm Census Bureau estimates.
These results show from 2010-2020, Illinois lost more than 787,000 individuals to other states on net, according to IRS data. Domestic migration is only one component of total population change, along with births, deaths and international migration. The Census Bureau similarly estimated Illinois lost 965,000 Illinoisans to other states during these years, with differences likely attributable to the fact roughly 18% of Americans don’t file federal tax returns and changes in filing activity can prevent matching tax returns year-to-year.
4. ILEPI ignores IRS migration data showing Illinoisans of all ages, incomes leaving state.
ILEPI also ignores IRS data that offers insights on who is leaving Illinois based on age and income. Instead, it relies on survey data ILEPI previously criticized as being responsible for “faulty Census estimates.”
Actual counts of people available from the IRS show Illinoisans of every age and income bracket reported to the IRS are leaving Illinois on net. Of the residents who left the state from 2020-2021, 51% (54,527) made more than $100,000 per year, 25% (26,540) made less than $50,000 and 24% (25,649) made $50,000 to $100,000.
ILEPI’s claim those leaving Illinois earn less than those who move in from other states gets it exactly backward. IRS data shows Illinoisans who left the state from 2020-2021 earned $37,000 more than those who moved to Illinois. In total, the combination of losing more residents to other states than Illinois attracts, and losing disproportionately higher income earners, meant the state lost nearly $11 billion in adjusted gross income in 2021 alone.
Illinoisans from every single age group also fled on net during the year.
Particularly troubling is 64% (68,246) of residents lost on net were tax filers age 26-54 and their dependents. These are prime working-age individuals and their families, whom the state’s economy is reliant on and who carry the most potential to grow the state’s population.
Ages 65 and up represented only 14% (14,563) of Illinoisans who left the state while 5% (5,514) were below age 26. That contradicts the idea Illinois’ migration problems were solely because high school graduates attended college out of state.
When analyzed together, the data shows Illinois lost residents from every combined age and income bracket recorded by the IRS.
5. ILEPI incorrectly claims taxes have no bearing on why Illinoisans move.
ILEPI attempts to “upend popular narratives that people are fleeing Illinois because of high state and local taxes” by citing survey responses that do not allow for taxes as a response. This is highly problematic.
While they rely on the Census’ March Current Population Survey Annual Social and Economic Supplement in surveys that exclude taxes as an answer option, Illinoisans consistently cite high taxes as a reason for wanting to leave the state. Polling from NPR Illinois and the University of Illinois found 61% of Illinoisans thought about moving out of state in 2019, and that the No. 1 reason was taxes. The Paul Simon Public Policy Institute found 47% of Illinoisans want to leave the state, and “taxes are the single biggest reason people want to leave” with 27% of respondents citing taxes as the motive for departing in 2016. More recent polling conducted by Echelon Insights in 2023 substantiated these sentiments.
Hard data confirms Illinoisans often follow through. Illinois loses residents to virtually every state in the nation – further confirmation of Illinois’ outmigration crisis – and the vast majority of these residents wind up moving to lower-tax states. The most popular destinations for Illinoisans leaving the state from 2020-2021 were Florida (21,632), Texas (13,929), Indiana (11,554), Tennessee (7,645) and Wisconsin (7,468), all of which have substantially lower state and local tax burdens than Illinois.
The Illinois Policy Institute previously, and at length, analyzed the survey ILEPI claims disproves notions about why Illinoisans move. While the survey doesn’t allow for taxes to be cited as a reason for leaving, the vast majority of respondents cite issues related to work or housing (more than 61%, according to ILEPI’s own analysis), both of which are greatly affected by tax policy.
It makes perfect sense that tax burdens are a key decision factor for Illinois families. Tax hikes harm the economy by decreasing disposable income and by discouraging businesses from investing and hiring more. Falling demand for goods and services reduces the expected profit to a business from creating additional jobs, resulting in fewer job openings for workers. Higher taxes also mean households save and invest less, resulting in permanently lower before-tax incomes.
Individual income taxes also affect employment through the supply of workers. A policy that raises after-tax wages could reduce the net outflow of workers to other states and encourage more workers to look for work in Illinois.
Reversing the Illinois exodus would also require the pace of new openings – labor demand – to exceed increases in the number of job seekers. Comparing contiguous border counties across the nation from 1970 to 2010, economic research showed increases in corporate income tax rates lead to significant reductions in employment and income. This is because income taxes exert a statistically and quantitatively significant influence on investment decisions.
Economic research also reveals strong housing demand is often linked to robust employment growth. Researchers found a strong negative correlation between an area’s housing prices and the area’s unemployment rate. The authors found after a negative economic shock – the last recession, for example – areas where housing prices declined the most also experienced the highest decline in employment.
All the evidence suggests taxes are an important reason for Illinois’ exodus because they reduce the availability of desirable job and housing options.
Conclusion: ILEPI’s reporting is incorrect and misleading
Rather than providing clarity or valuable insights into Illinois’ migration woes, ILEPI’s reporting ignores much of the critical hard data on population and migration that is available from the IRS. It should have known better than to draw incorrect conclusions by excluding data contradicting its claims that is found in state tax return data. Illinois’ population is declining and the state’s outmigration crisis is getting worse. Attempts to mislead and convince Illinoisans otherwise only exacerbate the issues that drive Illinoisans out of the state at a rate of one every 3 minutes and 43 seconds.