This is really not a new insight but an article in this week’s Crain’s about Illinois’ estate tax really got me to thinking about some of the reason’s to move out of Illinois and there are 4 of them that immediately come to mind: taxes, taxes, taxes, and taxes. Illinois politicians love taxes. Hence the Illinoyed campaign launched by Indiana.
In the case of Illinois’ estate tax it is relatively new, having been enacted on January 1 of this year. It taxes estates above $2 MM at rates that range from 6.4% – 16% and it applies to everyone that lives here or owns property here (not exactly sure how the tax is applied to out of state property owners). So not only does it discourage property ownership here but, as the Crain’s article points out, estate attorneys encourage their clients to set up residency in states like Florida or Texas.
Tax #2 is the income tax, which they just raised by 66%. They are now taking a whopping 5% of our income. Lovely.
Tax #3 is everyone’s favorite: property taxes. They are always going up and they serve to directly discourage property ownership.
Tax #4 is the new online retailer tax. So far they haven’t really collected much tax on this one. All they did was cause the online retailers to dump their Illinois affiliates, which then encouraged the affiliates to leave the state, moving to Indiana in some cases. If Illinois ever succeeds in collecting this tax it will just add to the already high cost of living here.
The government thinks they can establish tax policy in a vacuum and ignore the law of unintended consequences. But they don’t give people enough credit. If the government inflicts enough pain people will eventually relieve that pain by just moving away, leaving the bureaucrats scratching their heads trying to find someone else to take money from. And when people move away of course that leaves more homes for sale and fewer buyers for those homes – hence another contributing factor for lower home prices.