By: Ted Dabrowski and John Klingner
Illinois is an extreme outlier nationally when it comes to losing people to other states through domestic out-migration. Unsurprisingly, it’s also an outlier when it comes to losing the incomes those people take with them.
According to IRS data, the 250,000 residents who moved from Illinois in 2016 took $11 billion in adjusted gross incomes (AGI) with them to other states. In contrast, the 165,000 who moved into Illinois that year only brought with them $6.3 billion.
That left Illinois with a net loss of $4.8 billion in AGI and cost the state more than $100 million in lost tax income tax revenue.
Illinois’ AGI losses ranked it second worst in the nation in 2016. Only New York fared worse with a loss of $8.4 billion.
On the other hand, states winning residents as a result of state-to-state migration were also winners of a growing tax base. Florida increased its net AGI by $17 billion, the biggest winner of all. Other states like North Carolina, South Carolina, Washington and Texas gained AGI of more than $2 billion.
When put in per capita terms – better for apples-to-apples comparison with other states – Illinois lost $371 in AGI per capita in 2016. Only 5 states lost more AGI per capita: Connecticut, New York, New Jersey, Alaska and North Dakota.
Meanwhile, Florida gained more than $800 in AGI per capita in 2016. Idaho and South Carolina, more than $400.
Illinois’ losses in AGI have been going on long before 2016. In fact, Illinois has been one of the worst overall losers of AGI since 2007, the first year the IRS published summarized state AGI data.
Illinois ranked in the bottom five of all states from 2010 to 2015, and over the past decade it has consistently ranked in the bottom ten for AGI gained/lost per capita in the nation.
Over that 2007-2016 period, no state has lost more AGI per capita to domestic out-migration except Connecticut, New Jersey, Alaska and New York.
States that are winning the competition for people, like Florida, are also winning the competition for their money. That grows the tax base in those states, makes their economies more vibrant and increases opportunities for entrepreneurship.
But every year residents leave a state to the extent they are leaving Illinois, local economies take a hit, the tax base shrinks, and opportunity suffers.
And looking at just one year’s loss in AGI doesn’t show the full damage that’s been done. Every year Illinois loses people and income, the losses compound. In Part 3: $310 billion in accumulated losses from out-migration, we’ll look at that cumulative loss.