Illinois residents are fleeing the state. When people leave, they take their purchasing power, entrepreneurial activity and taxable income with them. For more than 15 years, residents have left Illinois at a rate of one person every 10 minutes.
Recent data from the Internal Revenue Service shows that, in 2009, Illinois netted a loss of people to 43 states, including each of its neighbors – Wisconsin, Indiana, Missouri, Kentucky and Iowa. Over the course of the entire year, the state saw a net of 40,000 people leave Illinois for another state.
The data reflects a continuation of a trend of out-migration from Illinois that has lasted more than a decade. Between 1995 and 2009, the state lost on a net basis more than 806,000 people to out-migration.
When people leave, they take their income and their talent with them. In 2009 alone, Illinois lost residents who took with them a net of $1.5 billion in taxable income. From 1995 to 2009, Illinois lost out on a net of $26 billion in taxable income to out-migration.
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Why are so many people leaving Illinois? Because the state’s poor public policies are forcing them out. Public policies drastically influence quality of life. On average, Illinois residents are leaving for states where they can have a higher standard of living.
The IRS data shows that Illinois residents are migrating to states where, on average, taxes are lower. Estate taxes in particular averaged 73 percent lower in the states to which former Illinoisans moved. Also, housing prices and union membership were lower. Finally, residents moved to states with lower population density and better climates.
Illinois policymakers must change the failed policies that have prompted so many people to leave Illinois. The state needs to lower taxes so that it can compete with its neighbors as well as states around the country.
In addition, the state must end its culture of spending and borrowing, which ultimately drive up taxes and chase away residents. Only through fiscal discipline can the state avoid a crisis and set the tone for a wave of in-migration.
Why this works
State-to-state migration is the ultimate expression of “voting with your feet.” After tallying the vote, Illinois is losing.
An influx of residents to Illinois could bring increased taxable income to a state in fiscal crisis, increased entrepreneurial activity to a state experiencing an employment crisis, and increased purchasing power to a state in economic crisis.
Implementing positive policy changes could make Illinois a great state people that seek out as a place to pursue the American Dream. With more competitive public policies, Illinois could once again become a magnet for people.