The Trib is reporting that millionaires are leaving Chicago faster than any other city in the United States:
Millionaires are leaving Chicago more than any other city in the United States on a net basis, according to a new report.
About 3,000 individuals with net assets of $1 million or more, not including their primary residence, moved from the city last year, with many citing rising racial tensions and worries about crime as factors in the decision, according to research firm New World Wealth. That represented about 2 percent of the city’s high net worth individuals.
Cities in the United States that saw a net inflow of millionaires included Seattle and San Francisco.
Chicago was among four cities worldwide with the biggest flight of millionaires.
You can hardly blame them. The factors are numerous. Chicago isn’t a destination city like San Francisco, LA, or New York. Chicago’s public employee pension problems. Illinois’s public employee pension problems. The nearly daily reports of somebody being gunned down in the streets. That isn’t happening in the neighborhoods where I’d expect millionaires to be living but bad press affects the whole city.
They’re using a pretty expansive definition of “millionaire”, too: net assets. Basically, if you own a good-sized home and have much in your 401K, you’re a millionaire by that standard. It probably includes most physicians and a lot of lawyers who probably don’t think of themselves as millionaires. It’s outside my bracket.
But millionaires leaving means that the burden of paying for all of those services we’re paying for will fall on people earning a lot less than $1 million.
Millionaires are leaving Chicago to come to San Francisco? Where the marginal state income tax rate is three and a half times as high? And the cost of living is higher, too? That’s odd, if one is looking for economic rationales. And if we’re talking millionaires, they aren’t presumably running off in search of that $15 minimum wage.
Same article:
That looks like a move to stability and rule of law. I would venture a guess that a disproportionate share of those Frenchmen leaving are Jews.
In the international moves though we see the same indifference to taxes we see in the domestic moves. If you’re making money you’re going to pay a whole lot more net tax in the US or Oz or Israel than you will in tax avoiding countries like Italy or Greece.
I don’t know. This study feels suspect to me. There’s something not making sense. Or maybe there’s no sense to be made and millionaires are irrational, too.
@michael, the progressive’s solution to Illinois’ education funding crisis is to double the income tax rate on millionaires. A non-binding state referendum overwhelmingly favored it, but it couldn’t get out of the legislature. I think people with the big bucks know they have a target on their back and I would not be surprised if during the course of various life decisions, leaving Illinois is becoming more popular.
Moving to San Francisco, though, unlikely.
Moving to San Francisco, unlikely, but they are the ones getting the big increase. Realistically, I would expect Chicago to always be high on this list. It is our third largest city. New Yorkers tend to stay in New York because they are all nuts and think NYC is the greatest. LA has warm weather so the old people who retire don’t need to move to Florida or Arizona. Chicago? Why stay? You can watch the Cubs and White Sox lose on TV.
Steve
Ultimately, “why” isn’t nearly as important as that it’s happening. It means the preferred strategy of taxing higher income individuals at higher rates is increasingly coming to mean “taxing high school teachers, fire fighters, and police officers at higher rates”. That brings us back to the “cat and rat farm” I’ve written about in the past. Perpetual motion doesn’t work.
Some very rough math:
Percentage of Illinois household with $1 million in (non-real-estate) assets = 5.54%
Household income required to be in the top 5% in Chicago = $218,557
There are some deductive leaps here, but it seems like a million dollars in assets would be available to a lot of older two-income households with $100,000 in income, which would include more than physicians and lawyers, but upper level civil servants. And the reason I bring this up is the other theory I’ve heard a few times is that Illinois will tax pensions to pay for the pensions, which wouldn’t work if the pensioners leave the state.
A high school teacher married to a Chicago cop (or firefighter) fits into that bracket.
I found the report, which didn’t specifically answer my question as to whether “Chicago” meant the city itself or the metro area. However, the discussion of London “millionaires” moving to small cities in the commuter belt along the Thames, suggests its just the city.
http://nebula.wsimg.com/6e5712bf40ffe85cc116a52402d5a7d7?AccessKeyId=70E2D0A589B97BD675FB&disposition=0&alloworigin=1
I did find some of the other departure cities suggestive of immigration concerns:
Paris: “most moved to the UK, USA, Canada, Australia and ISRAEL,” reason given “Rising religious tensions, lack of opportunities.” “France is being heavily impacted by rising religious tensions between Christians and Muslims, especially in urban areas. We expect that millionaire migration away from France will accelerate over the next decade as these tensions escalate.” “In other European countries where religious tensions are starting to emerge such as Belgium, Germany, Sweden and the UK will also be negatively affected in the near future.”
London: “wealthy UK born people that we spoke to said they were concerned about the way London and the UK in general had changed over the past decade or so. Australia seems to be their preferred destination.” “. . . most of the millionaires that left London were UK born whereas almost all of the millionaires that came into the city were from other countries.”
“Why stay? You can watch the Cubs and White Sox lose on TV.”
But you can’t watch the Blackhawks at the a Stadium.