Print Friendly, PDF & Email

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.

 

 

newest oldest most voted
Notify of
Mr_Common_Sense

JB’s term of Governor will be historic. He will no doubt go after the progressive tax rate that will raise taxes on most everyone. It’s like they are purposely trying to get even more people to leave Illinois.
I simply don’t understand these dems.

Andrew Szakmary

“Even with our flat income tax, the top 1% of tax returns pay a stunning 25% of the personal income tax Illinois collects.” Folks, you really need to tone down the hyperbole just a tad. In 2015, the top 1% of income earners nationally earned 22% of all income, and had over 40% of total wealth. Would you not expect, based on simple math, that with a flat rate income tax a group of taxpayers with those percentages of the total income and wealth pie would pay approximately a quarter of the total income tax collected?

J.A. Herzrent

i read the article as an invitation to consider the implications of facts. if one’s neighbor decides to raise goats, and one can afford to move away, one may decide to move to a goat-free zone. Whether the stink is in one’s nose or in the goats may be an interesting debate (and some will say that the mention of a simple fact is a dog whistle … let alone a dread hyperbole). I say Bah Humbug and Merry Christmas.

nixit

“The Center for Tax and Budget Accountability (CTBA) reported that with the 2015 rollback from 5 to 3.75 percent tax relief “disproportionately” went to Illinois’ wealthiest.”

Would Martire and the CTBA not expect, based on simple math, that with a flat rate income tax a group of taxpayers with those percentages of the total income and wealth pie would receive a larger benefit from a tax reduction? How can you benefit from a tax cut when you don’t pay taxes, amirite?

Someone certainly needs to tone down the hyperbole just a tad.

Buh-bye

But we’re told the evil cheating rich aren’t paying their fair share. Clearly, they are

steveinnaperville

any further tax hikes will escalate the outflow. this will in turn bring bankruptcy even sooner. the unions refusal to bargain will only doom all pensions.

Chumpchange

We’re staying for the kids, the youngest of which is 10. When she’s out of high school we’re gone.

Please tell me that won’t be too late. I fear it may be.

world with end

That’s eight more years. A lot will happen in that time period, and much of it may not help the taxpayer. For example, the progressive state income tax (read, higher taxes for the middle class) is hot on the burner. Also, consider that your property may not appreciate (or worse) in those eight years, effectively robbing you of an investment you could’ve otherwise made with the money tied up in your property.

Jeff

Move. Other states have great schools both public and private

Bross

Illinois taxpayers deserve the representation they elect. I hope they get the income tax rate to 9.5%. It will make a move to California seem like a discount.

Rick

Realtors and relocation consultants would fare well with mass advertising and pop up offices in Illinois! The inevitable coming of a retirement income tax or graduated retirement income tax will really accelerate the trend.

world with end

If the IL pols are shortsighted enough to push for taxing retiree income, the resulting tax, if enacted, would cause a big spike in retirees leaving IL. That could set a new record in IL for annual population decline. Ohio is the next state for IL to fall behind in population, but the progressive state income tax may cause that all by itself.

Jeff

I think that the key thing to remember is for a lot of these folks, their house is not their net worth nor is it an integral part of their net worth. They will hit a bid to get out. Or, the tax bite on their home is worth the trouble of owning it. The .0495% income tax hurts more than super high property taxes. Our friend JB is proposing 9.5% and with total one party rule and their propensity to screw with political foes, the writing is on the wall. It’s not just license plates you see on the… Read more »

Mike Williams

My anecdotal evidence is similar. Half of my friends/family are planning to stay indefinitely. The other half have a time frame for getting out.

Indy

Those that will stay until they are jobless and homeless.
Let’s see how willing to stay in Illinois they are then.
Every person has a breaking point

Jeff

They will tolerate a lot but not crime