By: Mark Glennon and John Klingner

We’re often told that Illinois is not losing its highly taxed residents. For example, a Chicago Magazine article last week had a headline saying exactly that. Don’t worry about lost income from the rich leaving, we’re supposed to believe. It’s just poorer folks fleeing.

It’s simply not true. There’s recent, hard data directly refuting that claim. If you want the best evidence, the Internal Revenue Service released its latest state-to-state migration numbers last month. Wirepoints analyzed the number of people moving into and out of Illinois and their net impact by income groups.

The data show that while lower income groups are fleeing Illinois in somewhat larger numbers, bigger earners are leaving, too. And they’re the ones who account for the overwhelming share of wealth lost by the state.

Specifically, tax filers with income over $200,000 made up 11% of all filers who fled, and they accounted for over half of the income that left Illinois.

Here are the details:

The IRS breaks down tax filers by Adjusted Gross Income (“AGI”) when it reports interstate migration data. Its new release covered the most recent year available, 2018.

First, let’s look at the net number of tax filers leaving Illinois in each income group. As you can see, the largest group is filers with under $25,000 in income. A net of over 9,900 filers were lost. But they were hardly alone. The wealthiest bracket of $200,000 and above, which is a vastly smaller portion of Illinois’ population, lost nearly half that, 4,800.

But look which group took most of the income with them. Below are the raw numbers on lost AGI from each category of earners. The bulk of lost income clearly came from the net loss of Illinois’ high earners. Those with incomes over $200,000 took $3.1 billion of income with them out of the net $5.6 billion total lost.

Now look at those numbers as percentages. Below is the number of people leaving and the AGI they took with them, by category, as a percentage of the total. The bigger earners were responsible for the lion’s share of lost income. Filers with incomes over $200,000 took with them 55 percent of the net income Illinois lost to other states.

This article focused on the most recent numbers, which are for the 2018 tax year. However, the story has been similar since at least 2012, as you can see from the chart below. For further information on the new IRS data including comparisons to other states, see our article from last month linked here.

The next time you read somebody claiming that wealthy Illinoisans aren’t fleeing, remember these facts.

Read more about Illinois’ financial and out-migration crisis:

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Christine

Is this household income, or individual income?

Possibly worth mentioning that 9% of the population has a household income of $200k+ (and Illinois is 16th when ranking states by income, so it could well be that 11% of the population has a household income of $200k+)

If it’s individual income, then only the top 4% makes that much, so there would indeed be an over-representation in the emigration numbers.

Sources:
https://dqydj.com/household-income-percentile-calculator/
https://dqydj.com/income-percentile-calculator/
https://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_income

It’s individual filer income, so yes, the wealthy are over-represented.

Rick

A progressive tax combined with population loss eventually makes everyone “rich” as the income cutoff needs to decline. So feel good we’re all going to get richer!

Poor Taxpayer

The best day of your life is the day the movers come and get your stuff.
No Hope for Illinois, it is a goner. The greed of cops, teachers and firemen have destroyed it for ever.

Rick

Even the govt pensioners leave, then we mail their pension checks to Florida! The state is a leaking sieve.

I bet the number of NGOs/non- profits is growing faster than any other group

Gary

When a retired teacher can make double what the common man makes plus annual cost of living increases Plus being able to retire earlier than normal worker the system just is not going to work and people are going to hate the state

Freddy

Don’t forget probably lifetime healthcare benefits mostly taxpayer funded. When they opted out of S.S. and Medicare they opted into our wallets. Approx $73 Billion in lifetime healthcare is also owed on a pay as you go basis.

nixit

So if people do NOT leave the state due to taxation, is that a mandate to continue to raise taxes? That seems to be the argument by the likes of McClelland. Just keep raising taxes on each tax bracket until we hit some breaking point.

“See that household making $300,000? We raised their tax rates and they didn’t move. That must prove higher taxes don’t force people to move! Raise their taxes another 2 percentage points. Keep doing so until some arbitrary percentage in that tax bracket leave the state. Then we’ll stop.”

The Truth Hurts

That’s the plan. The key will be not to raise the rates too quickly. Step 1 – Get “Fair Tax” amendment passed with top rate at 7.95% Step 2 – raise rates after next governor election. Something like “We need the rich to pay their fair share so we are raising their rate 1 or 2 points”. Step 3 – continue to slowly raise rates until top rate is at 12.95%. Go higher if it doesn’t look like the rich are leaving. Step 4 – Once rich leave in greater numbers Illinois will raise all the rates in all brackets.… Read more »

Susan

Next question: WHO are the fleeing high earners? Illinois can survive the loss of retired public sector six-figure income earners, those are a dime a dozen .
But data suggests the loss of doctors. And doctors aren’t easily replaced.
According to FSMB (Federation of State Medical Boards), which publishes annual Census of actively licensed physicians in the United States:
In 2016 Illinois had 49513 licensed docs, population of 12801534, with 387 docs per 100,000 population.
In 2018: 47494 licensed docs, 12741080 population, with 373 dics per 100,000 population.

Illinois is losing physicians at a higher proportion than general lost population.

con

When retired public sector workers move away, they can no longer cast a ballot in state elections.

Susan

With due respect, who cares about elections?
Our property tax rate is a function of the malignant narcissistic Illinois political industry.
That industry isnt partisan, it includes red and blue.
Call them the Purple Class, Illinois nobility, thriving at the cost of all Illinois residents not willing to compromise ethics.

Governor of Alderaan

Why would the rich leave? They were paying 3.75% a few years ago and now Jabba wants them to pay 7.95% under his blank check amendment. That’s on top of high property taxes and countless other higher taxes and fees. And you can bet that the 7.95% rate will be considerably higher in the near future

mqyl

Yes, the biggest problem with the progressive state income tax is the blank-check effect: the likelihood of IL raising the rates higher and higher over time. If it becomes law, you’ll find that, based on your high tax rate that’s in place immediately after enactment or not much into the future, your middle-class family income categorizes you as among the affluent. If it doesn’t become law, IL will get the extra revenue some other way by raising the flat tax rate, increasing user fees, creating new user fees, or, in the most likely scenario, all of the above. That’s why… Read more »

Mike Mike

The January 29, 2020 Chicago Magazine article by Edward McClelland used the 2010 Decennial Census data, and 2013 – 2017 ACS Census data, to conclude the following. “According to the same data, Illinois saw a decline in households earning less than $100,000 a year, while those earning more than $200,000 increased by 50 percent.” That was the basis for the article’s headline, “Illinois Is Not Losing Its Highly Taxed Residents.” That statistic is looking at the number of such households, and not their cumulative income. The Edward McClelland article did not consider cumulative AGI gained or lost in any certain… Read more »

nixit

Edward McClelland has an obvious progressive bent in his articles, as if he free lances for 1IL.

nixit

Keep in mind the state has to spend more to retain those on the lowest end of the AGI scale. We hear this a lot…if only Illinois “invested” more in social services/job opportunities/education/whatever, those people wouldn’t leave. Unfortunately, we already invest heavily in all these services. Financially-speaking, these people are cost centers. llinois doesn’t have to spend much to retain someone making over $200K, or, for that matter, $100K. I’d wager those people live in areas where property taxes account for over 85% of school funding. From a tax perspective, they’re self-sufficient. They are Illinois’ profit-centers, without whom, the state’s… Read more »

James

I think most who ponder this topic would agree that the poor require more per capita of governmental services than to the middle and upper income people. So, the poor are considers “takers” of the government’s revenue streams more so that the other segments. If taxes at all levels in Illinois rise as most expect, the common notion is that that the richer segments will move to more tax-friendly states–something that needs to be discouraged. I’ve given my my take on this topic a few months ago. We don’t know how the voters en masse will react to Gov. Pritzker’s… Read more »

Willowglen

Those with incomes over 200k leave by virtue of multiple factors, not merely a tax increase. Combine an increase in income taxes with the rampant corruption, incredibly high property taxes, poor schools, policies which favor makers over takers, and an oppressive regulatory environment, increased income taxes might well be a precipitating event for someone to leave. These factors have obtained over decades, and it is difficult for the political class to acknowledge just how deep of a hole Illinois has dug. 2008 taught me it doesn’t take much to cause a negative event. Suppose Illinois list 10,000 high earners in… Read more »

James

You have expanded the basic underlying story very nicely. Why people do what they do generally is complicated with multiple problems hopefully to be overcome or at least reduced by that decision. The main idea I was trying to promote is to give people incentives to do what society at large wants them to do. In terms of governmental budgets if you don’t want richer taxpayers to leave the state give them tangible reasons not to do so. At the other end of the socioeconomic scale similar-but-opposite incentives might well apply if they would choose to move elsewhere. Give ’em… Read more »

Anon

My family has finally decided that we’re going to leave Chicago this summer. I run a small business (I have mobility) and after a lot of lean years our family is now comfortably in the highest bracket…we’re very fortunate. But we’ve hit a wall here, and the feeling of hopelessness for this city/state is overwhelming. The idea of paying almost a 10% state income tax is insane to me. I’m supposed to pay a premium to live here?? All the results of our policies (migration, credit rating, pension status, real estate values, etc) are staring at us in the face… Read more »

DantheMan

Anon, the words “hopelessness” and “unfixable” that you used pretty much sum it up. Illinois seems to forget that technology has made it easier for people to live almost anywhere and still keep an eye on their interestsfrom a distance.

Susan

If citizens were given a mechanism of self defense against political malfeasance, a way to introduce actual consequences for bad actors in Illinois political industry, we might turn the tables.
The key to engaging a public bereft of hope is: monetize citizen engagement. Pay watchdogs. Bad guys get paid for bad actions, why aren’t we seeking to pay good guys to catch them?

debtsor

We have a mechanism – it is called voting. And the voters of Illinois believe that Democrats, even inexorably corrupt Democrat politicians, are better than the alternative, the other party, Republicans. Because abortion. Every other day for two months a flyer was delivered into my mailbox by the local Democrat claiming that his Republican opponent was a Trump supporter and would take away their abortion rights. Literally every other day for two months I got this flyer in the mail. The underfunded opponent had to go door to door begging for votes. The Republican ended up with 14,000 or so… Read more »

Susan

Howz voting been working out for us?
McHenry County is considered a Republican bastion, and we have over 4% property tax rate for the last decade.
In my personal experience, voting in Illinois is fruitless.
There is one political class: the Illinois political industry.
They thrive at the cost of our very survival.
Time to try something different.

debtsor

Your local school boards are non-partisan but filled with RINOs. That’s where most of your taxes are going.

Susan

I ran for school board, after 4 years of showing up at empty meetings…well mot quite empty, there were always union reps in attendance. Our school boards are packed with first-degree conflict: teachers, husbands of teachers, law firms with public contracts. I finally realized there is no political solution to the problem of malfeasance involving public funds. The solution must be systematic, and impervious to human influences of greed/fear. Analysis of the problem yields simple solution: emulate what works for the bad guys, but emulate within constraints of legality and ethics. (The reason to be ethical is to.build sustainable community… Read more »

Harry

You must be referring to D155…. I assume you’re located in Woodstock for the 4% property tax? My neighborhood in the CL area is getting crushed by property taxes while the value of our homes keeps coming down. It’s insane to watch all of this happening and I just want to get out and cut my losses. It’s very difficult with young children, family, and friends that we have remaining. The progressive income tax will be the last straw and I will take a loss on my ‘investment’ to get out. I cannot sustain providing additional resources that are not… Read more »

Susan

Woodstock D200. Cl155 is bad too. I have presented copious source-cited research to D200 Board, nobody cares. Incestuous self- serving corruption cloaked in self-righteous pride in ‘public service ‘ and unshakeable convictions of staying their course. Have had a few successes though: tax objection lawsuit stopped practice of deliberately over-levying millions in transportation fund for stated puropse of transferring millions to (capped) ed fund. Also we got rid of Lakewood TIF. My firm conviction based upon personal experience is: 1. Taxpayers need to.participate in their own self defense. 2.voting provides no relief. 3. Taxing bodies break the law constantly, while.performing… Read more »

Freddy

Don’t forget. The state kicks in approx 30% of the school budget blindly with any representatives being allowed at the bargaining table as in attorneys to look out for the best interests of the taxpayer. Everything done behind closed doors. Even JB or Madigan could not attend not even the media are prohibited and details are not made public until the contract is ratified. The state just sends the check. Same for the Federal portion of about 11%. After all it’s taxpayer’s money. How is this legal and more importantly why do we abide by the outcome.

Anonymous

I would sure like you to start with valley view 365u, Every year seems like they redo the bond issue and spend millions of taxpayers money without any referendums or voter input. They, the great administrative folks spent millions for 4 new ball fields at the high school, which is not needed added on to schools etc. 7.303 is the tax rate for 2018 for the school district. Almost 5,000 a year to the district in property taxes that can’t make the grade. Administration is so top heavy they trip over themselves. School buses with 4 5 kids on them,… Read more »

Susan

I would be glad to teach you what I know about what to look for, and then the only action I am aware of that has any effect: tax objection lawsuits. It took me years, but I kept staring at school budgets and cafr’s and 105 ILCS 5/ School Code and ISBE required filings and Administrative Policy until I finally realized: These malignant narcissists will find a way to take as much money from their communities as they desire. They will do and sleep with pride and clear consciences. They have no concern for the human devastation caused by property… Read more »

Susan

info abounds on that topic, but then what? What recourse for injured taxpayers?
Conflicts are legal on school boards.
Litigation is the only thing that gets any modification of bad behavior.
Discovery of actionable information requires participation by community, because those complicit in malfeasance wont snitch and those employed indide corrupt governments are afraid to lose jobs and pensions.

Irrelevant

“The forest was shrinking, but the trees kept voting for the Axe. The Axe was clever and convinced the trees that because his handle was made of wood, he was one of them”.

Turkish proverb

Indy

We welcome you & your business to Indiana with open arms, 50% lower taxes, fiscally responsible government, better schools, better services, more freedom, the best environment for small businesses to succeed & the best long term stability in America.

Susan

Agree, and grateful for your State’s example against which to compare and contrast Illinois.
Problem with abandonment of our homes is that then the bad guys win completely.
We are, i believe, near the end stages of Illinois political industry reverse pump-and-dump.
I might as well stick around and fight.

JimBob

Problems that arose 50-60 years ago and that are perpetuated by entrenched politicians and elected judges probably can’t be fixed in less than 50-60 years. And the fix is likely to have winners and losers. Too bad pension rights can’t be pledged or assigned. What would Vegas bid today as a lump sum for a bundle of teachers’ pensions? Certainly the teachers have a better chance of a payoff than homeowners, but many in both categories are significantly under-water. I might bid higher on the million dollar pension than the million dollar house, but (“they” say) the greater the risk… Read more »

Illinois Entrepreneur

Democrats look at us all as rats in a maze. They believe that wealth is a zero-sum game, in which all markets are simply a fight for everyone to get their piece of a fixed pie. They fail to understand that wealth is “created,” in addition to transferred. They focus on the “transfer” part, not the creation. Evidence of this and that they don’t see any problem here is that they are fervent about implementing their “progressive” tax. Again, back to their rats in a maze, they see that whoever escapes the maze will simply be replaced by someone else… Read more »

debtsor

“They believe that wealth is a zero-sum game, in which all markets are simply a fight for everyone to get their piece of a fixed pie. ” I don’t know, to me at least, this doesn’t seem to be what is happening. Democrats know that the pie grows, all the evidence is that the pie is growing. But the pie has been growing almost exclusively for the wealthiest people and this is the case virtually all around the world. Wealth generates wealth. The Democrats are using their political power to essentially, redistribute a lot of that new wealth, first to… Read more »

NorthSideNoMore

The game has been rigged by the politcal elite for a long time. Democrats have been at the helm of late and exeacerbated the financial debacle. Indeed everyone wants thier piece of the pie and on occasion a few new entrants get there shot, thats nothing new. The real problem not being addressed, in any meaningful way, is the collective Brain drain in Illinois. College bound students are leaving Illinois in droves taking with them their income earning potential. They are not coming back. The grass is indeed greener elswhere and will be for decades. Illinois debt is over $190… Read more »