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Illinois' Population And AGI Continue To Plummet Under Democratic Legislature

This article is more than 8 years old.

The sweet smell of success won’t waft through Deerfield, Illinois, much longer. Mondelez International, maker of beloved cookie brands Chips Ahoy and Oreo, recently announced plans to lay off 600 workers at its Illinois headquarters. Plus, Mondelez is shutting down nine manufacturing lines on Chicago’s South Side and spending $130 million to install new lines in Salinas, Mexico. This, of course, is just the latest in a long line of blows dealt to Illinois. Thanks to years of unwise fiscal decisions and short-sighted tax increases, people (and their incomes) leave the state in droves.

Where are all these disenchanted Illinoisans going? Well . . . anywhere except Illinois. Taxpayer-migration data released by the Internal Revenue Service on July 31 shows that for the first time in recorded IRS history (stretching back to 1990), Illinois lost residents to every other state in the Midwest.

Such is the legacy left by former Governor Pat Quinn, who in 2011 enacted a 67 percent hike in Illinois’ state income tax. This historic tax hike hit hard, causing harm to working families, small businesses, and entrepreneurs alike. Illinois voters were so disappointed by their state’s decline that, last November, they ousted the Democrat governor in favor of business-savvy, reform-minded Bruce Rauner. Understanding what a mess Illinois is in, Rauner quickly proposed a series of strong reforms aimed at solving the state’s massive unfunded-pension problem as well as curbing union power. He also advocated for policy reform that would help manufacturers, in particular, including lawsuit reform, workers’ compensation reform, and a freeze on property taxes.

Unfortunately and rather unsurprisingly, Governor Rauner is facing pushback from dyed-in-the-wool Democrats in the Illinois General Assembly (particularly Senate President John Cullerton and House Speaker Mike Madigan). Legislative leadership’s wrong-headed handling of the state’s economy is driving Illinoisans away. In 2011 alone, Illinois lost 24,000 taxpayers and their 26,000 documented dependents, for a net loss of 50,000 people. These former Land of Lincoln residents took their adjusted gross incomes with them, of course – the AGI loss for the state of Illinois was $2.5 billion in 2011 alone. (That’s a $600 million increase from 2010, when Illinois saw $1.9 billion in net AGI leave.)

Significantly, people and incomes aren’t just going to the typical low-tax paradises, like Florida and Texas. They’re also going to every other state in the Midwest. And the House and Senate Democrats who refuse to call a vote on Rauner’s bills have offered nothing in the way of viable alternative plans.

The problem is perhaps most pronounced in Chicago, where Mayor Rahm Emanuel seeks solutions for the enormous hole in the city budget. There are many reasons for this budget debacle – unfunded pension liabilities and an increased minimum wage among them – but one of the biggest factors is the erosion of the Cook County tax base. The out-migration of taxpayers during 2011 will cost Chicago more than $9 billion in taxable income over the next ten years, according to the recently released IRS data. During 2011 (again, the first year of Illinois’ 67 percent income-tax hike), Cook County lost nearly 28,000 more people than it gained; along with these residents went more than $900 million in net AGI for the year, with $700 million leaving the state entirely. At the time of writing, each and every Chicago household is on the line for more than $63,000 in local-government debt.

To break it down even further: Even before cookie giant Mondelez International decided to pull up stakes, Illinois was losing 40 manufacturing jobs every single day. In the first half of 2015 (January through June), Illinois suffered a net loss of 7,300 factory jobs – while neighboring Indiana is up 7,600 factory jobs, and Michigan is up 12,800 jobs. Illinois legislators should feel a moral imperative to keep factory jobs in the Land of Lincoln, considering how many families depend on this work. The time is far past due for the General Assembly to make smart decisions that keep jobs, families, and incomes in Illinois.  If they do not, one Illinoisans should think back on the fiercely competitive boxing match between Muhammad Ali and Joe Frazier, which prompted Howard Cosell to call out, “Down goes Frazier! Down goes Frazier!”