By: Mark Glennon*
It’s not just that people are leaving because of taxes, though that’s probably the biggest problem. Long before last week’s tax increase over half of Illinoisans were telling pollsters they wanted to leave the state, citing taxes as the biggest reason.
Many of those who remain have become morally indignant about taxes without reform, which is all we got last week. They’ll do something about it. One of our commenters put it this way:
Many will stay due to jobs or family or being underwater on their mortgage…. Some things are just out of your control.
But there are things in your control. Encourage your kids to attend out-of-state universities. Unless your kid gets a scholarship or has to stick around to work through school, I see no need to give the state institutions any more of my money. Send your out-of-state acceptance letter to your local reps, showing them the $100K they’ll be losing out on. And cutoff all alumni support.
Illinois state fair? No thanks. Let it be the AFSCME company picnic it has devolved into. Send your fair business up north to Wisconsin. Cooler temps and cream puffs. Tell your reps again.
Much of that kind of activity hasn’t been quantified, or can’t be, but the anecdotal stories are overwhelming. Remember how the deniers a few years ago ridiculed what was then just anecdotal evidence of people leaving, especially big taxpayers? Census and tax data eventually backed it up. This is no different.
It’s happening within the Illinois, too. People will shop where sales taxes are lower because those rates have become so meaningful to them. One reader told me about how busy the take out Peapod location is in Deerfield, Lake County. Cook County shoppers are going there, just across the county line, to take a couple points off their sales tax.
Or a $.72 tax on a beverage six pack, as Cook County is trying to levy? That one might just infuriate people more than the taxes with much higher dollar total.
And does anybody think home buyers aren’t avoiding, or insisting on much lower prices, in the many towns with effective property tax rates over four or five percent?
It’s all aggravated by policy that’s outright hostile to business, especially in Cook County and Chicago. I got an earful last week from a CFO of a thriving tech company who heard the tax increase news while he was trying to figure out Cook County’s new paid sick day ordinance. It’s a compliance nightmare that warrants a separate story. “There’s no way I would start a company here now,” he said.
As for me, I’m writing this from a house in southeastern Wisconsin my wife and I bought recently. I figured we’d get ahead of the escape-from-Illinois crowd that’s increasingly feeding demand here. If Illinois doesn’t adopt the radical changes it needs by the time my youngest graduates from high school there, I’ll make this my permanent home — like so many Illinois ex-pats I’ve met here have done. In the meantime, we’ll buy our groceries here often, where they’re exempt from any sales tax.
Is it disloyal or selfish to avoid paying in Illinois?
On the contrary. Paying into an unreformed Illinois is what should be questioned. If you think some of the social service providers have been underfunded by the state, as I do, contribute to them yourself. Think the state universities are underfunded? Write a check. You can get money to any of those far more efficiently and selectively by doing it yourself and not through the tax collectors.
Personally, I’d be OK with higher taxes if they were needed after massive reform. Wisconsin isn’t exactly a low tax state, but it’s honest, delivers value and welcomes employers.
Illinois’ tax collections have already been dropping. Last week the state released its report for the fiscal year that ended June 30. Tax receipts declined 3.2% — almost $1 billion from the preceding year.
I think we are well past the top of the curve — the point where higher rates result in less tax yield. Sure, tax receipts will surge for a few years. Maybe the state will get the $5 billion per year it claims — at first. It takes time to move or adapt in a way that reduces your taxes.
But it won’t hold up. Too many people are too furious. They won’t pay, one way or another.
*Mark Glennon is founder of Wirepoints. Opinions expressed are his own.