Bad news for Illinois
Time will tell, but recent actions in Illinois may result in more people leaving the state.
Last week, the Illinois Legislature voted to override Republican Governor Bruce Rauner’s veto of a spending plan and income tax increase.
“The income tax for the average household in Illinois is going to go up $1,100 per year,” says Michael Lucci, vice president of policy at Illinois Policy Institute. “It’s another massive tax increase for the state of Illinois.”
According to Lucci, two out of three Illinois residents polled on this issue wanted to have a balanced budget without any income tax increase.
“Clearly the will of the people was opposed to what happened Thursday, so we’ll see what happens in 2018,” he continues. “The last time we raised our income tax, we had a significant increase in the loss of people and tax dollars to other states, and the same thing is going to happen this time.”
To put things in context, Lucci says the average person who leaves Illinois makes $77,000 per year. The average person who enters Illinois makes $57,000 per year.
“That’s the largest differential of any state in the country,” he explains. “So the average person leaving makes $20,000 more than the average person coming in, and on top of that, more people are leaving than coming in.”
Jonathan Williams of the American Legislative Exchange Council (ALEC) agrees that this does not bode well for the people of Illinois.
“This is a package that allegedly included some spending reforms, since many of those reforms are gimmicks in the budget,” says Williams. “This was a pure power move by Speaker Mike Madigan and his groups that are looking to raise taxes in Illinois. They’ve been looking to do this for quite some time, and unfortunately, this kind of package does not bode well for the future of Illinois. The state has already struggled with job creation and out-migration to other states with businesses and individuals for many years.”
Before this income tax increase, Illinois ranked 44th in ALEC’s annual Rich States, Poor States publication.
“Given these massive tax increases, I would expect that number could shoot downward and could rival states at the bottom — like New York — because of that new burden put on taxpayers,” Williams concludes.