‘How Money Walks’ — Especially from Illinois
If you wonder what out-migration does to Illinois’ tax base, take a look at numbers compiled by Travis Brown, author of How Money Walks. They are devastating.
Between 1995 and 2010, based on data from the Census Bureau and and the IRS, 42 million Americans moved between states — about one-seventh of the population — taking with them $2 trillion of annual net adjusted gross income (“AGI”, as defined by the IRS). Florida, Texas, and other low tax states hit the jackpot. Illinois got hammered, along with California, New York, Ohio, and New Jersey.
Illinois lost 537,000 people who took with them $29 billion in annual AGI, a staggering loss to our income tax base. Keep in mind this is based on numbers through 2010, before the 66% increase in individual income taxes, which surely sped the exodus.
You should not be surprised. Earlier reporting showed Chicago has the second largest exodus of major American cities; Crain’s published numbers about revenue lost throughout Cook County; and data from van lines have shown the out-migration. This new work shows the direct impact on the state’s tax base, but surely the damage goes much further. Most of the income those taxpayers took with them likely would have been spent here had they stayed, buying goods and services here, employing more people…all of which would have generated more tax revenue.
On one particularly important point, Illinois government does not collect the data, probably because the results would be embarrassing. Specifically, the exact numbers on how many high income taxpayers are leaving the state is are not collected, though the evidence that they are is overwhelming. Those numbers would be especially important to have because high income taxpayers are the ones tax increase proponents think they can soak to solve our fiscal mess.
“It’s a revenue problem” according to some — just raise taxes. No. Higher rates will only spike the exodus and further erode our tax base.
Illinois is burning. Our problems remain worse than understood.