The editors of the Wall Street Journal point out the embarrassing reality—Illinois’s labor force and population are declining sharply:
The Prairie State lost a record $4.75 billion in adjusted gross income to other states in the 2015 tax year, according to recently IRS data released. That’s up from $3.4 billion in the prior year. Many of the migrants were retirees who often flock to balmier climes. But millennials accounted for more than a third of the net outflow in tax returns.
While Florida with zero income tax was the top destination for Illinois expatriates, the Illinois Policy Institute notes that Illinois lost income and people on net to all of its neighbors—Wisconsin (6,000 people based on claimed exemptions), Indiana (8,200), Iowa (1,900), Missouri (2,000) and Kentucky (1,100). What’s the matter with Illinois?
Too much for us to distill in one editorial, but suffice to say that exorbitant property and business taxes have retarded economic growth. Illinois’s corporate tax rate is 9.5%, and pass-through business owners pay 6.45%. Though Illinois’s flat 4.95% income tax rate is relatively low compared to its neighbors, Democrats have found other ways to clobber their citizens.
Property taxes in Cook County and Chicago’s “collar†counties are the highest in the country outside of California and the Northeast. The average homeowner who moves from Lake County, Illinois, across the border to Kenosha County, Wisconsin would receive an annual $3,200 annual property tax cut. Taxes may increase as Democrats scrounge for cash to pay for pensions. Fitch Ratings reported this week that Illinois’s unfunded pension liabilities equalled 22.8% of residents’ personal income last year, compared to a median of 3.1% across all states and 1% in Florida.
They fail to mention sales taxes. Cook County’s sales tax are the highest of any major metropolitan area in the country.
Taxes aren’t the only reason for the decline in labor force and population. Demographics is another reason but that makes no difference to the state. Illinois’s obligations continue to grow while its indebtedness and its ability to pay decline, a consequence of its shrinking tax base.
As the graph above illustrates Illinois’s labor force has declined by about 5% over ten years. I believe that the decennial census will reveal that Illinois’s population has declined as well, possibly by as much as 10%.
Illinois needs reform not more indebtedness or higher taxes. That means that if Democrats are elected they need to be reform-minded Democrats rather than continuing the corrupt practices of Illinois’s establishment Democrats. Sadly, the likelihood of that is bleak. It’s a lot easier to attract voters by promising them the moon with no ability to pay for the moon than it is by campaigning on belt-tightening.
The same Democrat mentality, dealing with fiscal incompetency and looking for more ways to tax people, is rampant in CA as well. Schools are always short on money, as are pension funds, down the line. Even though revenue seems to increase, CA govt never seems to be able to get ahead of it’s debt. Nonetheless, this sanctuary state stumbles along and continues to vote the same people into office who are guided by the same tax and spend policies, burning through money much the same way all our fires are burning down the state.
It’s all kind of symbolic…..