The Illinois Policy Institute recently released a study showing a steady pattern of out-migration from Illinois to surrounding states as well as to the American south. The report sited several sources including Internal Revenue Service data and information from moving companies and shippers to demonstrate the movement of citizens away from Illinois.
This does not mean that Illinois is losing overall population since the birth rate remains strong and there is a steady in-flow of students and immigrants. The findings make clear that overall population is not as important a figure as studying the movement of the working age, taxpaying population. For a state to have long term fiscal health, it needs a growing, dynamic economy that creates new jobs through small businesses and luring educated workers to fill middle to high income jobs. Those workers tend to be between 25 - 45 and tend to pay a lot of taxes to fund government, whether through the state income tax, sales taxes and/or property taxes.
The IPI report demonstrated that the people who are leaving Illinois tend to be those who pay a lot of tax. The IPI estimate between 1995 and 2009, the state missed out on $26 billion of taxable income due to out-migration.
The IPI is a conservative leaning research group, thus it is no surprising that they put the primary blame of this exodus on the high level of taxation in Illinois. They point out that on average, the states where Illinoisans relocate have lower overall tax rates than the Land of Lincoln.
The argument that higher taxes will cause massive relocation is a little dubious. People's lives are very complex and one issue alone is not enough to cause them to abandon their home town, leave their friends, dislocate their children and start over.
People move for a wide variety of reasons. A new job, a new child, a new marriage, college, weather, getting closer to family, getting away from family and retirement are just the most popular reasons that have little to do with tax policy. Taxes are on the list; but, for most people, it is a contributing factor to moving, not the primary driver.
Government policies create the economic and social environment in which people live. The effects that government policy, including tax policy, have on that environment either makes the state more competitive and attractive or it decreases the quality of life and makes it harder for people to meet basic goals for their families.
I have no evidence to support this, but I think most people leaving Illinois are doing so for very common sense reasons. The fact that Florida is far and away the number one destination for Illinoisans says a lot. Retired people and those sick to their stomach with Chicago winters flee to a place that is extremely friendly on the human spirit. Texas, Georgia, California and Arizona are also very high on the out-migration list. Don't you think the warm weather and easy winters play a major role? Each of those states have strong job markets for the young and a strong marketing campaigns to lure the retired and elderly, but weather is their greatest asset. People move to those states primarily for the weather and secondarily for the lifestyle . It should not be overlooked that they now have friends and family who already moved there, making such a transition easier.
Weather and relatives do not explain the heavy out-migration to Indiana, Missouri or Wisconsin. Their winters are no prettier than Illinois's. Their economies are very similar to Illinois and their job markets are only somewhat stronger. This is where quality of life created by government policy shows up the most.
If property values are higher in neighboring states and the taxes on that property are lower, a home owner has incentive to consider the move. If there are similar jobs that meet your skills in another state and the overall tax rates are lower thus giving you more take home pay, it is very enticing. If the schools have better outcomes and there is an expansion of choice for parents in picking the right school for their child, parents will feel good about making that move. If regulations and fees are less cumbersome on small businesses, why not start up in that state instead of yours?
Now, the most critical point. When you are considering a move to another state, don't you ask someone who has lived there about their experience? If you don't know anyone, you can check out blogs and forums on moving to a new city or state. I don't know if you have checked lately, but if you ask anyone from Illinois about moving there, the answer is almost always a negative. Just check out the blogs and forums where people relocating to Chicago for business are asking about the state. Responses from those living here come fast and furious.
"You will be taxed to death."
"The public schools are terrible, try to move to the suburbs."
"Lots of gang violence."
"Corrupt politicians and endless red tape."
"Property taxes are insane."
"Hard to save money here."
That is just a sampling of what people around the country hear about Illinois. Our reputation is awful and our own residents reinforce the perception when asked about it.
So yes, the tax situation makes Illinois less competitive for luring businesses and young workers. Yes, Illinois government has created an economic environment that stifles workers, small business and entrepreneurs. Yes, neighboring states are easily picking off the low hanging fruit of frustrated Illinoisans ready for a better life.
Pointing to taxes alone and saying that they are solely responsible for Illinois's loss of taxpayers excludes many other day-to-day and quality of life factors. Government policies as a whole are to blame. The worst side-effect of these failed government policies is the bad taste left in the mouths of once proud Illinoisans who now talk about their home state by hiding their faces behind brown paper bags. States count on their citizens to be proud ambassadors inviting people to move in. Illinois has turned its citizens into giant warning signs that caution those thinking of a move to think twice.
The Welcome to Illinois signs on the highways from neighboring states might as well read: "Caution. Enter at your Own Risk."