By: Ted Dabrowski and John Klingner
Out-migration data from the Internal Revenue Service shows Illinois’ wealthy are leaving the state at a damaging pace.
In 2016 alone, Illinois lost more than 9,200 tax filers earning $200,000 or more, while only 4,700 such filers moved into Illinois. The net result was a loss of more than 4,500 wealthy Illinois tax filers.
On a net basis, Illinois lost more wealthy residents per capita than any other state in the nation except New York.
Though Illinois’ wealthy make up a relatively small share of the people lost to out-migration, they’re responsible for the largest share of income lost to other states. When people leave the state, they take their incomes with them.
In all, Illinois suffered $11.4 billion in outflows and gained just $6.6 billion in inflows in 2016, leaving the state with a net $4.87 billion loss in Adjusted Gross Income. More than 50 percent of that came from losing people who made $200,000 or more.
Again, New York was the only state to lose more income to other states than Illinois did.
Illinois’ losing trend has been going on for years. The state has lost an average of about 3,000 net wealthy tax filers – along with $2.1 billion in AGI – every year since 2012, the first year the IRS began publishing migration data by tax filer age and income.
An understanding of the migration losses of Illinois’ wealthy is important since the wealthy are the target of the proposed progressive income tax that’s on the November 2020 ballot. The proposed tax structure would hit hardest Illinois’ wealthiest – those making $1 million or more – with a 60 percent tax hike.
For reference, in 2016 the Illinois Department of Revenue reported that only 20,000 tax filers in Illinois had taxable incomes greater than $1 million. They made up about 16 percent, or $2 billion, of the total net personal income tax revenues.
With so few residents with million-plus incomes – and so many wealthy residents leaving each year – it’s easy to see how targeting the wealthy could very quickly deprive Illinois of its richest citizens. Only a few have to leave to disrupt the revenue promises of the tax-hike proponents.
In part 5, we’ll look more at who exactly is leaving Illinois. As it turns out, it’s far more than just the wealthy.
Read more about how Illinois is an outlier in out-migration:
- Illinois’ shrinking tax base: Residents leave and take their incomes with them (Part 1)
- Illinois’ shrinking tax base: Loss in income is one of nation’s worst (Part 2)
- Illinois’ shrinking tax base: $310 B in accumulated losses from out-migration (Part 3)
- Illinois’ demographic collapse: fewer immigrants, fewer babies and fleeing residents