Bad as yesterday’s news was of census numbers showing record annual population loss for Illinois, it looks much worse going forward.
It’s particularly serious for high net worth people because they pay an outsize share of taxes in Illinois. Even with our flat income tax, the top 1% of tax returns pay a stunning 25% of the personal income tax Illinois collects. That’s based on the most recent data on taxpayer stratification from the Illinois Department of Revenue that we FOIAd.
Anecdotal evidence says they will be leaving or changing their residence to other states in droves, and that the problem is accelerating.
I’m basing this on anecdotal evidence, which we don’t normally use, for good reason. Five years ago we wrote here about the same anecdotal evidence we saw in 2013 saying flight was coming, though it hadn’t yet shown up in the numbers. That was before census data and IRS migration data, that we now have, showing how that evidence proved valid for the years that followed. Deniers scoffed (and many still do), but the anecdotal evidence proved right.
Today, it’s much worse.
Jeff Carter is somebody who knows lots of those high net worth folks. He’s a venture capital investor, Co-Founder of Hyde Park Angels and was on the Board of Directors of the CME Group. He wrote this last month:
Most of my friends are leaving or they are redomiciling. When I mean most, it’s not 90% but it’s over 80%. Most of my friends are encouraging their children to go to school out of state and not take jobs back in Chicago. This is very, very different from the past.
Exaggeration? If so, not by much, based on all I see and hear from estate planning lawyers, tax accountants, wealth managers and some of those same well-off folks I know through my former work in venture capital. The vast majority say they don’t intend to stick around long term. Many have already fled or changed tax residency. Heck, drive through Kenilworth or Lake Forest and you’ll see plenty of Florida and Texas license plates. They’ve changed residence to one of their other homes.
There’s also part of yesterday’s actual census data I find especially sad. More people leaving than coming in is only part of the problem. In addition, Illinois’ number of annual births has fallen by 8.8% since 2011. That’s abnormal, and is the fourth largest state decline behind New Mexico, Hawaii and West Virginia.
Maybe it’s personal and subjective, but I like kids, and I like seeing them around. I think having them around, regardless of where they eventually settle, is key to a society’s vitality.
–Mark Glennon is founder of Wirepoints.