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By: Ted Dabrowski

At Wirepoints, we’ve covered the impact that Illinois’ punishing property taxes are having on South Cook families. Their home values are being destroyed and their disposable incomes consumed. Effective tax rates of 3 to 5 percent or higher are chasing people, many of them with limited means, out of their homes. The Chicago Tribune and others have reported on the exodus of blacks from the Chicago area as fewer jobs, more crime, a failing education and higher taxes make Illinois unlivable.

But it’s not just people with limited means that are looking elsewhere for a more fair deal. Some on the North Shore also don’t like what they see. They don’t like how they’re being disrespected by their politicians – paying ever-higher taxes for ever-fewer services. And as Illinoisans leave, the state’s tax base shrinks, making it even harder on those who remain.

One of those people leaving is a North Shore neighbor I recently met. He and his family are leaving Illinois for Colorado.

For him, the calculus was simple.

Stay and pay more and more for a government he trusts less and less, or leave and save $1 million dollars.

His North Shore property taxes are about $27,000 a year. Taxes on his new home in Colorado – he’s already purchased the home – are just $3,300.

Saving that difference year after year, and investing those proceeds at 6 percent, means he will save $1,000,000 over 20 years. For retirement. For healthcare. For his kids’ education. Or for charity and travel.

And Colorado isn’t going to swallow those property tax savings with a different set of taxes. Illinois has the highest state and local tax burden in the nation, according to Wallethub. Colorado has the 39th highest burden.

That’s the same sort of calculation that people across Illinois are doing, whether it saves them $10,000 or $1,000,000. They are doing the math and looking for an exit. A 2016 Paul Simon poll found that 47 percent of Illinoisans want to leave Illinois and their number one reason for leaving is taxes.

And the house my neighbor is getting in Colorado for just $3,300 in property taxes and at a much lower price than his Illinois house? It’s on more than an acre. A beautiful location on the side of a mountain. Paved roads. Top schools. And just an hour from some the best ski slopes in Colorado.

A million people and more

Residents have been leaving Illinois at an alarming rate to find better opportunities elsewhere. From 2000 to 2017, Illinois lost a net of more than 1.3 million people to other states. That’s the equivalent of wiping Aurora, Rockford, Joliet, Naperville, Springfield, Peoria, Elgin, Waukegan, Cicero, Champaign and Bloomington off the map.

In 2017 alone, Illinois lost over 114,000 people. That net loss of people to other states now outpaces international immigration and net births in Illinois. As a result, Illinois is shrinking.

Illinois has now lost population four years in a row. Only West Virginia has that same distinction.

Wise counsel

Nearly five years ago I received wise counsel from three Detroit-area residents – a newspaper reporter, a municipal bond expert and a civic leader – just days after the city went bankrupt. I was on a fact-finding trip to the Motor City to learn what I could from the city’s sad demise. Their assessment not only helped me understand how we ended up with the Detroit of today, but also to heed the warnings of how failed government policies can destroy people’s lives.

The most important lesson I brought back to Illinois was this: Respect the taxpayer. Detroit didn’t, and everyone left.

Unfortunately, that lesson is lost on Illinois politicians. Rather than reform Illinois’ corrupt ways, the only solution they continue to offer up is higher taxes. Even as services get cut, the political elite are comfortable saying “it’s time to pay up.” They ignore that Illinoisans already pay the nation’s highest taxes.

But Illinoisans know their burden. They know they get little value for their money. And they know they’re disrespected. And so they leave.

It’s high time Illinois politicians begin respecting their constituents.

If not, Illinoisans have choices. And they can do the math.

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MEE

My husband and I left Chicago 5 years ago for SC. We built a new house for half of what we sold our house for in Chicago. Our property taxes are $1700/yr, sales tax is 6%, no tax on food, great schools, beautiful new library, no city sticker, no permit parking, one license plate, $10 driver’s license (good for 10 years), etc. etc. Cost of living was the #1 reason we left, and #2 and #3 since those taxes will continue to go up no matter who is in office. The weather is a nice bonus but Chicago and IL… Read more »

Jimhall

To the commenters . Blah blah blah blah, regardless of the specific percentile of who’s leaving why. In the words of YOUR presidential hopeful ” what difference does it make!” …. The politicians are incompetent and corrupt, Fact- people are leaving , fact- businesses are leaving , both high income, mid and lower. You folks sound like you work for .gov ,,, just a bunch of unproductive nonsense, trying to one up each other with your deep (in your minds) intellect . Taxes, crime, corruption, infrastructure ARE the reason why . Weather and health would be more so with older… Read more »

Andrew

Ted, I am a bit late to this party, but I am in the exact same situation as the family profiled in this piece. We recently moved from the city of Chicago to Grand Rapids, Michigan, when my wife received the job offer of a lifetime. And to anyone reading this thread who thinks Illinois should continue Just Raising Taxes, make no mistake: taxes were one of top two reasons for our move. While our state and local income tax rate here will be the same as in Illinois, almost every other tax under the sun will be less for… Read more »

Dave

There’s no grand study that accompanies the slow drip of each higher income household’s specific set of circumstances for leaving Illinois. In our case, we owned a small business with a national client base. Computer, phone, occasionally jump on a plane. We could work from anywhere, Texas for example. So, after years of getting nit-picked by the Illinois dept of revenue (small businesses, easy target) and seeing our property taxes more than double on a house we purchased 18 years earlier, yet barely budge in value during that period, we said ‘Illinois, we give up, bye-bye’. Respect is the key… Read more »

Bingo.

Rick

Taxing retirement income is coming next. Then a constitution change to go to a progressive tax. Next towns will be shifted to cover pension costs, their response will be to raise property taxes. Ask any democratic candiddate about the possibility of lowering taxes, they will laugh inside. Next the bond markets will feed on us as the collateral madigan guarantees on some new bond type. I’m out a here after retirement in a few years, I’ll rent elsewhere with my home equity. Leave or be eaten alive, slowly.

Adam

The pensions will collapse before taxes go up too much more. It is called reality and math. Not everyone can move, and yet they will have to be able to survive financially. The end.

advocate

Ted, I thought it was interesting in that Simon institute poll you cited….that people who expressed a desire to to leave Illinois cited a reason OTHER THAN TAXES 73 % of the time…..and cited Taxes 27 % of the time. Your number one reason is technically accurate but substantially misleading. There are lies dam lies and statistics right Ted? When you quote the study you mislead TED, and I quote you as you claim what the study asserts, ” that 47 percent of Illinoisans want to leave Illinois and THIER NUMBER ONE REASON IS TAXES” IT is also technically correct… Read more »

Ted Dabrowski

Advocate, people are leaving in droves and they are leaving for a host of reasons…corruption, stagnant wages, disappearing middle-class and working class jobs, higher property and income taxes, and a culture that defends the status quo. They leave for a combination of reasons – I made that clear in talking about South Cook – “fewer jobs, more crime, a failing education and higher taxes make Illinois unlivable.” I also linked to that Paul Simon study so everybody can see it. But nevertheless, taxes is number one. Not weather, not government, etc. In the end, I am not sure what you are trying… Read more »

Advocate

Thx Ted for responding, I am gonna address exclusively why you assert people move. My words are sharp because some demagogic assumptions are being made. Like the assumption that Illinois tax policy is and will be the primary reason for out migration. For instance: It is one thing to argue we should not raise taxes. Its quite a different thing to say we cannot raise taxes because the sky will fall. See the dogma? Its quite another thing to say we cannot raise taxes because too many will move away and cripple our economy. See the dogma? This IS a… Read more »

Adam

The pensions will collapse before taxes go up too much more. It is called reality and math. Not everyone can move, and yet they will have to be able to survive financially. The end.

nixit

Let’s unpack the statement: “We Cannot raise taxes or the sky will fall!” I am a working family, literally. Both spouses work. Both spouses are required to work or we could not afford our home. Could my family absorb an income tax hike, say 2 percentage points? Theoretically, yes. I probably wouldn’t be able to put money into the college savings accounts or my family would have to forego the summer road trip, among many other cutbacks, but yes. Would I move? Let’s see, we’d both have to find employment. Then buy a new house while simultaneously trying to sell… Read more »

nixit

Adding…this is but one taxing body. Imagine my county, township, school district, high school district, police/fire, park district, mosquito abatement…all thinking the sky will not fall.

Advocate

Well said Nixit. You make a good general argument that taxes are bad. And can be tyrannical. And should be minimized at all costs and ONLY raised when absolutely necessary. I agree. Taxes are also necessary. I totally agree you personally should only pay the taxes you can afford to pay and dont pay the taxes you cannot afford to pay. Your family comes first. This is moral I believe this with you. I will help defend your home from the taxman Nixit. As a USMC vet by your side and with my JD in court, I help ya fight… Read more »

Mark M

Advocate – you didn’t respond to my last comment to you. But I suspect that is par for the course for apparatchiks. One of the things I learned in law school decades ago (and yes, it was a painful thing to be on the law review of a top 10 law school on the east coast rife with effete, emotive, posing, progressive know it all elitists who virtue signaled about their care for working people but never spent anytime around them) was to make arguments that actually advance your case. So if I distill your point, given your explication of… Read more »

nixit

I would argue that this can be lumped into what is in and not in government control. The state can’t do much about weather, family, and health (23%). Cost of living and housing are directly related to taxes (now 35.6%). Government is obviously related to taxes, but some of that could be government sucks because they don’t have enough revenue, so let’s say half is attributable to high taxes and lousy govt (now 43.1%). I’d say maybe 2% of the 12.7% of jobs/education is linked to taxes as employers choosing a cheaper or RTW state results in less available job… Read more »

Advocate

Yes exactly you have made my point quite succinctly Nixit,

If we want to make the claim, and we apparently do, that tax policy is why people move away, we may have to twist and bend a study or two to make the study say what we want it to say.

Kinda like what we read today ….but is this Simon study the best we got to prove the point?

Ted Dabrowski

Advocate, before I respond again, lay out what you propose as the fixes. Are you saying taxes don’t matter because you want them higher? Are you backing the outcomes delivered by Rahm, Madigan, Rauner and the legislature? Status quo, just more money from taxpayers?

FYI, I’ve had many debates with Martire at CTBA. He basically wants people to believe that things like taxes don’t matter. That people aren’t incentivized or disincentivized by taxes. He wants people to ignore what’s really happening on the ground where real people live.

Advocate

I thought we were discussing the article ya wrote…. ….You NOW want to talk about how I personally would steward a fix for the entire State of Illinois and all of its local governmental entities? Sigh. and really Why? are my opinions now suddenly needed on that? Where should I start the list? My personal budget fix is not suddenly the point of discussion is it? I certainly have made my fiscal suggestions before in many different posts over the years. I am sure I will make them again sooner or later, if they seem to matter. Still, I was… Read more »

Mark M

Advocate – the budget problem is the elephant in the room. And it has a symbiotic relationship with both taxes and poor government, unless you believe that increased taxation and kleptocratic regulation is somehow exogenous to economic productivity. I would assume that even you wouldn’t endeavor to take that position, so any discussion over taxation and poor government really should lend itself to a fact based line drawing exercise as to what works, and what doesn’t. Even if one concedes that taxation is not in part a cause of out-migration (a very, very dubious proposition), out-migration is occurring and the… Read more »

Mark Glennon

An important point to keep in mind on this is that it really doesn’t matter if a majority or even a strong majority are OK with Illinois taxes. If just, say 5% or 10% were unhappy enough about them that they did effectuate a move over the next 5 or 7 years, that would be devastating, especially if it is high earners as has been the case. One study showed Chicago had the second highest out-migration of any city in the entire world.

K L

Many don’t have a choice but are stuck here to remain victims.

Fred

Ted- One of the main reasons that the South Cook towns are in trouble because of all the school districts in a small area. To name some Thornton Dist 215 and 154-Bremen-Harvey-Hazelcrest-Posen Robbins -Dixmoor/Prairie Hills-South Holland-and Thornton205. These are in an approx area of 45-50 square blocks from 139th north to cottage grove east to 180th south and expressway west. Every dist has supers 1 earning 294K/yr ass’t supers and top heavy in administrators. How many took pay cuts during the downturn while home values were plummeting and property taxes rising. All these should be consolidated to one district with… Read more »

Craig Davis

This is a insightful statement but it likely understates the difference. Given the differences in unfunded pension / retiree healthcare liabilities between the states, one could argue that Illinois property taxes will increase at a higher rate going forward than those in Colorado.