The Price Of Illinois’ Mass Exodus
This column originally appeared on Forbes.com. Visit http://www.forbes.com/sites/travisbrown/ for a complete archive of past columns.
For yet another year, the most common view of Illinois is in the rear-view mirror. United Van Lines just released its annual “National Movers Study,” which examines the number of inbound moves to and outbound moves from all 50 states. The majority of Illinois moves – 63.2% – are outbound. The only states with a more abysmal outbound move rate are New Jersey and New York (at 66.6% and 64.6%, respectively).
United Van Lines’ study is just the latest in a series of disheartening reports about Illinois. Last month, newly released U.S. Census data showed a sharp decline in domestic population. During just one year (July 1, 2014 through July 1, 2015), 105,200 more people left the state than moved to it. While it may be tempting to position this loss as a “Midwestern problem” – in other words, people leaving the heartland states for sunnier coasts or more tech-centric urban centers – in fact all five of Illinois’ contiguous neighbors experienced net gains during the same time period.
Mark Fitten, of the Illinois News Network, reported that a substantial amount of the loss owes to Illinois’ burdensome tax structure and economic volatility. David Yepsen, Director of the Paul Simon Public Policy Institute at Southern Illinois University, said that while “businesses don’t like taxes, they hate uncertainty” – and uncertainty definitely hangs heavily over the state of Illinois, with its $111 billion in unfunded pension liabilities and corporate tax rates that rank among some of the nation’s highest.
Illinois Governor Bruce Rauner is an undisputed reformer when it comes to cutting taxes and bettering the opportunities for small businesses and workers. Yet he fights an uphill battle owing to legacy decisions from his tax-and-spend predecessors, as well as resistance from the Democrat-controlled legislature. While lawmakers squabble, Illinois loses $4,422 in net adjusted gross income every single minute – and between 1992 and 2014 (the most recent year for which IRS taxpayer data is available), Illinois lost a staggering $41.86 billion in net adjusted gross income.
Springfield-issued directives create serious roadblocks to meaningful reform, as can decisions made in the state’s largest city. Chicago Mayor Rahm Emanuel keeps disincentivizing investments in the Windy City, thanks to short-sighted approaches like the “Netflix tax” and the hiking of property taxes (to the tune of $588 million over the next four years) in order to fund pensions and balance the budget.
In addition to the concerning data from the new United Van Lines study, just this week an editorial in Investors Business Daily called Illinois the “Sick Man of America.” IBD outlines the grim reality of Illinois’ current economic climate: “Local governments have seen their bonds downgraded. Chicago’s tourism agency had to lay off staff. State universities aren’t receiving government funding. Social service agencies are being squeezed . . . . Some, especially on the left, may strongly dislike Rauner’s proposals, but he’s the only chance at reform Illinois has. He’s the only reformer who managed the feat of getting elected.”
Rather than balk at Rauner’s strides toward for reform, leaders in Illinois would do well to look at the past years of failure and corruption, and trust in a principled governor with plenty of real-world business experience. If legislators continue to prevent Rauner’s attempts to brighten Illinois’ future, voters should certainly take note. Otherwise, next year’s United Van Lines study will show an even higher heap of boxes, packed up and ready to go to a more promising place.