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* The Better Government Association took a deep dive into IRS tax data and found that this happened after Illinois raised its income tax at the beginning of 2011 and before it partially rolled back at the end of 2014…
Over that time frame, the total number of federal tax filers in the state grew by just 9,000, an almost imperceptible one-tenth of 1 percent. But the number of filers reporting adjusted gross income between $100,000 and $200,000 grew by 16 percent, while the number reporting income in excess of $200,000 rose by 29 percent.
The wealthiest got even wealthier, with 3,618 Illinoisans reporting $1 million-plus incomes in 2014, up 25 percent from four years earlier. Collectively, the adjusted gross income of those earning more than $1 million annually jumped 37.5 percent over the period.
* So, who left Illinois?…
The portrait of those who left the state during the four years of the income tax hike is dominated by the young and those with modest earnings. Records show about 55 percent of departees were under 35 years of age, and more than 60 percent reported incomes of less than $50,000. […]
The IRS data do show a leap in net out-migration from Illinois in most years after 2012. Yet the biggest jump occurred following the partial rollback of the tax hike, underscoring the difficulty in making cause-and-effect arguments about population loss and tax burdens. […]
The declining number of Illinois tax filings is most pronounced downstate, records show. Macon County recorded a 6 percent drop in tax filers between 2011 and 2014, a period during which food processing giant ADM moved its headquarters and top executives from Decatur to Chicago. Even so, Macon experienced a 17 percent jump during those years in tax filers reporting income higher than $100,000. The tally of those reporting income below $100,000 fell 9 percent.
A similar dynamic played out in rural counties along or near the Indiana and Kentucky borders. Total filings dropped by a range of 1 percent to 6 percent between 2011 and 2014, while the percentage of those reporting six-figure incomes grew.
People tend to leave when they can no longer afford to stay. Or, in the case of young people, when they find opportunities elsewhere (which is why a properly functioning higher education system is so important).
There’s a whole lot more, so click here to read the rest.
posted by Rich Miller
Monday, Apr 8, 19 @ 11:58 am
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The leading economic export of Illinois counties outside Greater Chicagoland (and perhaps Metro East and Champaign County) is high school graduates.
Comment by Anyone Remember Monday, Apr 8, 19 @ 12:05 pm
Interesting read.
Needs a follow up, actually two.
1) exactly where the revenue from the previous tax hike went: what was used for past debt and how much new spending occurred
2) and in light of the proposed graduated income tax, it would be nice to see how state spending patterns changed when the flat income tax was introduced back in 1970.
Comment by RNUG Monday, Apr 8, 19 @ 12:14 pm
“The wealthiest got even wealthier, with 3,618 Illinoisans reporting $1 million-plus incomes in 2014, up 25 percent from four years earlier.”
“The rich will leave” hysteria is just the flat-out lie many think it it is. A longer-term study backs up these findings, showing the rich are the least likely to leave because of taxes. But the IPI, Trib editorial board and others try to proverbially throw sand in our eyes with their propaganda, to distract us so we don’t see how well the rich are doing.
“Yet the biggest jump occurred following the partial rollback of the tax hike”
They don’t say. Well, there goes another big hole blown in the propaganda. We also lost jobs in 2015, the first year of the state income tax rollback. So much for the job creators creatin’ jobs because of lower taxes.
Comment by Grandson of Man Monday, Apr 8, 19 @ 12:26 pm
Anecdotal evidence is pretty much worthless, but this matches my family’s experience. Millennial members looking elsewhere for college and members with HS or some college left for Texas or Indiana.
Comment by Red Ranger Monday, Apr 8, 19 @ 12:39 pm
=== People tend to leave when they can no longer afford to stay. ===
Capitolfax has made many great contributions to our collective wisdom over the decades, and this is surely one of them.
Contrary to the “common sense” argument made by the Tribune editorial board and their gaggle of elitist defenders, stands the data.
People don’t leave “because they can afford to,” but because that cannot afford to stay.
Comment by Thomas Paine Monday, Apr 8, 19 @ 12:46 pm
People don’t just up and leave places where they’re making a lot of money? Shocking.
I’m sure the tronc edit board will be all over this. You know, because they’re sticklers for facts when it comes to drawing conclusions.
https://www.theguardian.com/inequality/2017/nov/20/if-you-tax-the-rich-they-wont-leave-us-data-contradicts-millionaires-threats
https://www.mercurynews.com/2019/03/11/skelton-high-taxes-be-damned-the-rich-keep-moving-to-california/
Comment by wordslinger Monday, Apr 8, 19 @ 12:47 pm
Except with a progressive tax going up to 10% there will be a huge spike in exists. As Warren Buffett said, why would any company invest in a State that has massive underfunded pension liabilities? Who are we kidding here, as not of the tax proposals or revenue schemes will do anything but postpone Illinois going junk for a few years. The targets of the prog tax are informed voters and like in Connecticut they will leave or avoid paying the top rate and revenues will remain stagnant or actually drop. Further we are at a tipping point as educated voters see the train wreck of running out of folks to tax and a bailout.
Comment by Jack Dog Monday, Apr 8, 19 @ 12:51 pm
@ Jack Dog- yep, don’t let things like facts derail your frivolous rantings.
Comment by JS Mill Monday, Apr 8, 19 @ 1:01 pm
Jack Dog -
Will Warren Buffet’s Berkshire Hathaway owned Burlington Northern Santa Fe railroad be leaving Illinois, pulling out of the lucrative Chicago market?
Comment by Anyone Remember Monday, Apr 8, 19 @ 1:03 pm
–As Warren Buffett said, why would any company invest in a State that has massive underfunded pension liabilities?–
He said that, did he?
Maybe he should ask his son, who lives in and has invested tens of millions in the Decatur area.
That dude could live in Monte Carlo if he wanted to.
https://www.chicagotribune.com/business/ct-howard-buffett-decatur-philanthropy-0716-biz-20170713-story.html
Comment by wordslinger Monday, Apr 8, 19 @ 1:16 pm
Anyone Remember who of course are deflecting to a Company like BNSF who is already stuck here because they already invested in the State. Buffett is talking about attracting new business and plants and those are going to Tenn, Ind and Wisconsin. Nice Try.
Comment by Jack Dog Monday, Apr 8, 19 @ 1:18 pm
So higher taxes on the ‘rich’ will mean that this group will want to stay here. It might even attract other ‘rich’ people to the state.
Yea right.
There is no question that many people left the state who were low income earners- lack of jobs. Does not mean higher income groups will stay. of course they will make independent judgments on whether to stay and that will be based upon economics. If it is important for them to stay- they will. If not then there is no reason to
stay. This impact, one way or another, will not be sudden and will take a number of years to examine its efffects.
Comment by Nonbeleiver Monday, Apr 8, 19 @ 1:19 pm
New Jersey, Ill, and Conn all have things in common: High taxes, one party in control and underfunded pensions. They also are 1-2-3 in population loss. Sorry JS.
Comment by Jack Dog Monday, Apr 8, 19 @ 1:25 pm
–This impact, one way or another, will not be sudden and will take a number of years to examine its efffects.–
Yes. And the post shows the effects of the 2011 tax increase. More wealthy filers.
The headline should have been a big clue for you.
Comment by wordslinger Monday, Apr 8, 19 @ 1:27 pm
(which is one among many reasons that a properly functioning higher education system is so important).
Comment by Anonymous Monday, Apr 8, 19 @ 1:28 pm
i think the number illinois should be concerned with is high school graduates going to college out of state then not returning. why would they return?
Comment by illinois_citizen Monday, Apr 8, 19 @ 1:31 pm
=Sorry JS.= . For being wrong? Or for ranting like a delirious drifter?
Comment by JS Mill Monday, Apr 8, 19 @ 1:33 pm
–Sorry JS.–
About your inability to address facts in the post?
Comment by wordslinger Monday, Apr 8, 19 @ 1:37 pm
To Illinois_citizens point, I have 4 kids through college while living in this State my whole life. Only 1 went to a Illinois college(UofI) because they got better deals financially and only 1 works here and she wants to move out of State. Excellent point.
Comment by Jack Dog Monday, Apr 8, 19 @ 1:39 pm
With property taxes being what they are with the knowledge they are only going to go up in the future given the state’s pension situation many lower/middle income folks that would like to be home owners frankly can’t afford it here.
Home appreciation is tough when in some cases the yearly bill for the property taxes can cost what you spend on the mortgage.
People aren’t stupid, and everyone knows there aren’t enough right people in Illinois to float the taxes required the next 30 years to keep this state solvent, and eventually they will be paying up as well.
Most other states don’t have that kind of time bomb hanging over their fiscal situation, so there is far less uncertainty moving to a surrounding state.
Comment by Anon Monday, Apr 8, 19 @ 1:47 pm
Curious how JS Mills attacks me with name calling yet my posts get deleted and his stay? Whats the deal Mr Miller?
Comment by Jack Dog Monday, Apr 8, 19 @ 1:51 pm
Jack Dog, take a deep breath and state your argument based on the facts. Maybe that will help. Here’s a handy chart.
https://week.com/news/political/2019/03/07/pritzker-rolls-out-proposed-graduated-income-tax-rates/
Comment by Da Big Bad Wolf Monday, Apr 8, 19 @ 2:13 pm
One of the key take-aways in the article was buried in the last 2 paragraphs.
== … What they have, she said, is tax certainty.
“When businesses don’t know, they pull back. They don’t invest, they don’t hire people because they don’t know what’s happening next. Whether or not it’s a high tax or a low tax, they want certainty in the future because they know how to work around that.” ==
Comment by RNUG Monday, Apr 8, 19 @ 2:16 pm
over any 4 year period, I would expect many people making 80 or 90k to join the 6 figures club. not a surprise at all. I don’t see the correlation here. also, picking up stakes and moving away isn’t an overnight decision for anyone. more likely done after a lengthy plan is executed. I don’t doubt any of that data, but little if any conclusions seems supported.
Comment by Shrimp gumbo Monday, Apr 8, 19 @ 2:45 pm
Since Illinois’ population decline began in 2014, the state has shrunk by more than 157,000 people. That’s equivalent to losing the entire city of Joliet, Naperville or Rockford. Those are the third-, fourth- and fifth- largest cities in the state, respectively. Illinois’ change in population since 2010 is the worst of any state in the nation, in raw terms.
Comment by Jack Dog Monday, Apr 8, 19 @ 2:57 pm
– Yes. And the post shows the effects of the 2011 tax increase. More wealthy filers.” —
Um, the tax increase resulted in more wealthy filers? Think that through.
Instead, how about a factor that appears nowhere in these comments: After the Great Recession ended in June 2009, the United States economy began lifting a lot of boats. Some people’s incomes rose, and kept rising.
Maybe that gradual national recovery from such a deep recession explains more about income tax returns than state tax rates do.
Comment by Moody's Blues Monday, Apr 8, 19 @ 3:03 pm
These two paragraphs immediately put the tax issue in excellent context along with the fact that California, a state with a higher rate of taxation than Illinois, is the second leading (by an eyelash) destination for Illinois migrants. Our population is getting older and retirees usually leave for warmer climates. If North Dakota was number two I might be worried.
Citizens are leaving rural Illinois because there are fewer and fewer opportunities. The suburbs, not so much. Chicago is gaining high earners and losing African Americans.
“The long-running political argument in Illinois is an echo of a battle in Minnesota, and it underscores the complexity of the tax debate. That state has the highest overall tax burden in the region, and in 2013 it added to that load by tacking on a surcharge for individuals earning more than $150,000. Critics warned of an exodus of the wealthy and overall damage to the state.
But from the 2013 to 2016 tax years, the number of Minnesota tax filers reporting income of $200,000 and more increased by 28 percent. The tax records also reveal a net outflow of residents reporting income of $100,000 and above, continuing a trend that predated enactment of the surcharge. While this was happening, Minnesota’s population grew 2 percent, a modest increase but one that exceeded all its Midwestern neighbors.”
Comment by JS Mill Monday, Apr 8, 19 @ 3:07 pm
–Since Illinois’ population decline began in 2014, the state has shrunk by more than 157,000 people.–
And given your train of logic, I presume you attribute that to the tax cut that went into effect Jan. 1, 2015.
Pick a lane, dude.
Comment by wordslinger Monday, Apr 8, 19 @ 3:17 pm
I wonder if the surge in property tax prices correlates with the outflow of people?
It’s always been expensive in Illinois, but it seems since the recession tax bills have gone through the roof.
People focusing strictly on the income tax are missing the bigger picture, as for many folks who own a home the property tax bill is usually higher than the state income tax bill.
Pointing at the low income tax rate in a vacuum to discredit the idea that taxes don’t alter behavior is disingenuous, as anyone who owns a home is far more concerned about their property tax rate (and corresponding home value) than they are the state income tax rate.
Comment by Anon Monday, Apr 8, 19 @ 3:47 pm
@ Anon,
You have commented upon a crucial financial tax issue that is too often overlooked. After home prices declined dramatically in 2008 there were rarely lowered assessments even several years after averaging should have taken hold.
Home prices go up- taxes go up. Home prices drop- taxes do not drop. And it’s not just because voters have approved tax rate increases.
Comment by Nonbeleiver Monday, Apr 8, 19 @ 4:59 pm
== for many folks who own a home the property tax bill is usually higher than the state income tax bill. ==
This is especially true for senior citizens … who mostly don’t pay income tax and do own their homes.
Comment by RNUG Monday, Apr 8, 19 @ 5:16 pm
== Home prices go up- taxes go up. Home prices drop- taxes do not drop. And it’s not just because voters have approved tax rate increases. ==
No, it is because government still needs more revenue as prices of both labor and goods go up. For most people, the local school district(s) levy makes up about 70% of the property tax bill. The only way to stop property tax bills from going up is to increase State payments to schools … and the only way to increase State payments to schools is to raise the income tax even more than is being proposed.
Comment by RNUG Monday, Apr 8, 19 @ 5:21 pm
This is especially true for senior citizens … who mostly don’t pay income tax and do own their homes.
If this is true then too many people are not paying state income tax to support government services in this state.
Comment by Nonbeleiver Monday, Apr 8, 19 @ 5:32 pm
- RNUG - Monday, Apr 8, 19 @ 5:21 pm:
== Home prices go up- taxes go up. Home prices drop- taxes do not drop. And it’s not just because voters have approved tax rate increases. ==
No, it is because government still needs more revenue as prices of both labor and goods go up. For most people, the local school district(s) levy makes up about 70% of the property tax bill. The only way to stop property tax bills from going up is to increase State payments to schools … and the only way to increase State payments to schools is to raise the income tax even more than is being proposed”
So your home is just a cash cow for the government and its value and any tax rates that were approved, or not approved, are basically meaningless.
Comment by Nonbeleiver Monday, Apr 8, 19 @ 5:52 pm
Do any of you folks always supporting higher taxes on the wealthy actually believe 3 billion in new revenue will have a meaningful impact on the State’s fiscal crisis. Come on JB wants to spend much of the new revenue on his progressive BS while the pension debt balloons. Even if you put every new dollar into pension payments the unfunded liabilities would continue to grow all while the roads fall into utter disrepair. 3 billion is peanuts- the State probably needs closer to 6 billion which means the : percent will soon grow to 50 percent in terms of who is impacted by the new tax regime. Let’s be honest
Comment by Sue Monday, Apr 8, 19 @ 6:26 pm
RNUG- Scott walker was able to improve upon your theories- WS saved 3 billion with Walkers legislation which proved so popular that Tony Evers is not even proposing to undo it. If only but it aint gonna happen here
Comment by Sue Monday, Apr 8, 19 @ 7:31 pm
=So your home is just a cash cow for the government and its value and any tax rates that were approved, or not approved, are basically meaningless.=
You should educate yourself before commenting.
As RNUG stated, schools are the largest portion of property tax bills due to the way Illinois funds or does not fund schools.
First, many schools, especially suburban schools, are in PTELL (also known as tax caps) counties. Schools in those counties have a guaranteed amount of money no matter what happens. This is bad during high inflation because it limits increases when they need them badly. When housing prices go down it means rates will go up to meet the guarantee because housing prices have nothing to do with what it costs to educate kids.
Comment by JS Mill Monday, Apr 8, 19 @ 7:56 pm