By: Ted Dabrowski and John Klingner
One of the most damaging impacts of Illinois’ people loss to other states is the destruction of Illinois’ tax base. When people leave in a given year, they take their incomes (adjusted gross incomes, or AGI) with them, and that means the state’s tax base suffers.
A smaller tax base, everything else equal, means less tax revenues for safety, education, road repair and every other core government service – or, as is typically the case in Illinois, more debts and more tax hikes.
Unfortunately, Illinois’ out-migration problem is much bigger than just a one year loss: the state has lost people and AGI every single year since at least 2000, the first year of Wirepoints’ out-migration analysis. The AGI losses pile up on top of each other year after year, slashing Illinois’ tax revenue growth and destroying Illinois’ overall prosperity.
In all, the cumulative impact of out-migration for the last 23 years means the state budget lost out on about $3.6 billion in income tax revenue in 2022 alone. (Said another way, had Illinois not lost all those people over the last 23 years, the state would have had $3.6 billion more in income tax revenues in 2022 alone.)
The revenue losses for 2022 are even bigger when you take into account all the other revenues foregone – sales taxes, gas taxes, fees, etc. – due to the loss of taxpayers.
Thanks to the state’s failed spending and pension policies, Illinoisans are paying the price.
A breakdown of the numbers
The latest 2021-2022 migration data from the IRS shows Illinois reported $9.8 billion in lost adjusted gross income as a result of losing a net 87,000 residents to other states. Read our full report here.
That $9.8 billion in AGI, after taking into account exemptions of $1.6 billion*, could have become $400 million in income taxes for the state (calculated at 4.95%). That in itself is a significant amount of lost income tax revenues.
But the cumulative impact of the AGI losses are much more dramatic. Let’s build out how state’s 2022’s income tax revenues were impacted by the cumulative AGI losses since 2000.
In 2000, Illinois suffered a net loss of $2 billion in AGI as a result of outmigration, meaning the state lost out on being able to tax $2 billion that year.
The next year, 2001, Illinois lost another $2.3 billion in AGI due to outmigration. Pile on top of that the $2 billion in AGI lost in 2000 and, overall, the state lost out on being able to tax a cumulative $4.3 billion in AGI in 2001.
In 2003, Illinois lost another $2 billion in AGI, putting the cumulative AGI losses for that year at $6.3 billion.
You get the picture. When Illinois loses a taxpayer, his income isn’t just lost for tax that year. It’s lost for every subsequent year, as well.
So when you carry the above exercise all the way through to 2022, it totals nearly $88 billion in AGI that the state couldn’t tax in 2022 because of all the cumulative losses. Subtract exemptions*, and it results in about $74 billion in net income. Multiply that by Illinois’ 4.95% flat tax and you get $3.6 billion in income tax revenues the state could have had in 2022 alone if Illinois had not bled residents for 23 years.
The same tax-revenue-loss calculations can be done for all prior years.
In all, Illinois has lost – counting every single year’s cumulative loss – $700 billion in AGI, that it could have taxed over the entire 2000-202 period. It’s one of the big reasons Illinois is in such a fiscal mess and why it has the worst credit rating of any state in the country.
The positive impact of in-migration
The opposite of what’s happened to Illinois is true for the nation’s big winner of people and their incomes: Florida.
Gains in people and income pile on top of each other each year, building an ever-growing tax base. In 2022 alone, the state’s tax base was some $272 billion higher compared to 2000 because of the state’s 23 straight years of net in-migration.
And while the state of Florida doesn’t directly take advantage of that income because it doesn’t have an income tax, it’s understandable why the government is swimming in cash when you take into account all the other tax revenues – sales, gas, fees, etc. – that the state’s growing number of taxpayers pay.
In all, Florida has gained– counting every single year’s cumulative gain – $2.14 trillion in AGI, that it could have taxed over the entire 2000-2022 period.
Reversing the flow
More than anything, Illinois’ lost revenues represent the fundamental crisis this state faces because of chronic out-migration.
Illinois is stuck in a vicious downward spiral it can’t hope to escape from without fundamentally changing how it governs.
*Total exemptions were 16% of total Adjusted Gross Income in 2021. Total exemptions were derived by dividing net income ($484 billion) by AGI ($578 billion). Wirepoints used tax year 2021 because it’s the latest year available from the Illinois Department of Revenue.
Read more from Wirepoints:
- The great exodus continues: Fresh IRS data shows Illinois loses residents to 40 other states
- IRS migration data: Big blue states biggest losers of people, wealth. Big red states biggest winners. – A Wirepoints 50-state survey
- New Census data: 75% of Illinois cities shrank last year, Chicago population drop nation’s 3rd-worst
- The well-educated are fleeing Illinois, too
Audio and summary 
If this bill passes, say goodbye to local control over all Illinois parks and expect to see open drug and alcohol use, needles, no sanitation and fire hazards, but no ordinary park users.
Hurray for Wirepoints for covering this erosion. Any of our other media outlets looking at this? Nah! Makes JB and their favorite toady Dem Governors and Mayors look too bad. But wait till JB tries to buy himself more national attention. These numbers are going to blow him out of contention for anything outside of Illinois where the local media covers his rear end.
Pritzker and his cohort are the media’s true masters, unfortunately. Any decent Christian politician (Trump, Vance) would be crucified for being half as badly as JB. But somehow the people who killed His Son set the agenda? It’s a crying shame.
Yup, The regular Illinois media completely ignore our reports on the IRS migration data, though national media from the Wall Street Journal on down have cited it.
Cold hard facts that the Democrats can’t deny, but just ignore year after year. How much does IL lose in taxes yearly from Pritzker and family hiding all their assets off shore?
Illinois has the highest number of government units with duplicate functions. Most states function fine with half of the number of government units. More government means more taxes. It seems governments here only exist to provide jobs and pensions for union workers. Reducing government is the only way to go.
Tip of the iceberg for the USS Illinois… Captained by a crew of blind, deaf, mutes… Apologies to any BDMs… Decisions have consequences… Here’s the Democratic platform: 1) Destroy any sense of values, standards, and expectations In the home – suggest the GUBMINT as a proxy for parents… 2) Vilify business as being greedy and malicious 3) Look at the same as a vehicle that can be saddled with endless taxes and fees 4) Eliminate merit as the measuring tool and grow the administrative state 5) Declare criminals are the victims and the victims are guilty of DRIVING the poor… Read more »
This massively understates the problem. First, those incomes could be inflation adjusted. Second, that income crowds in demand for other goods and services. Third, the state loses out on businesses attracted by high quality human capital and lower total factor costs. IL takes in about 15% of income in taxes. So 15% x $700 billion is $105 bn minimum tax revenue loss to the state due to an entirely Marxist social and economic program driven by radicals in the public sector unions. The opportunity costs to families are incalculable. Illinois should be a warning for every state. If you embrace… Read more »
As one Democratic State representative once told me, “Lies, all lies. People are waiting in line to get into Illinois.” After all, there are only a very few states in the US where you can voluntarily be a slave. And as the old line Southern Democrat Ante-bellum aristocracy said, “The slaves love being slaves and its good for them.”
I wonder how many more Illinois residents are trying to squeeze out just a few more years before they also pack up for a better state. How many have a child nearing graduation, an elderly parent with a short life expectancy, or a pension plan (401K) where they will soon be fully vested? Beyond that, there will always be those that no longer want to deal with snow/ice. Based on my own experience, I have never heard anyone mention Illinois as somewhere they would like to relocate. My personal belief is people move to Illinois for 2 reasons. They move… Read more »
A third – it is still a destination for recent college grads… Until businesses make the rational decision to leave – either because it is to meet their fiduciary responsibilities to their shareholders, or because their accountants must meet their fiduciary obligations and explain the negative ARB of residing in Illinois – it will get worse at a slow rate… We just need the Big4 and bulge brackets to scale down their presence here to increase the rate at which this dump moves to find a bottom. Until it gets there, to a bottom, it will continue to limp along… Read more »
I’m expecting states like Illinois to ask for a federal bailout like NYC tried in the 1970s. Presidrnt Ford told em to pound sand. A President Harris wouldn’t.
Yes, if a Dem gets elected President, IL gets another four-year extension to keep the spigot open to fund its mismanagement.