Vallas: ‘Tax Illinois’ rich’ dogma is a dangerous delusion
Chicago Mayor Brandon Johnson likes to parrot platitudes about taxing the rich to fix the city, CTA and Chicago Public Schools finances. But all three made bad decisions and did not adjust to post-pandemic realities. And the rich can move away.
After the collapse of a transit funding bill intended to stave off a “fiscal cliff,” Chicago Mayor Brandon Johnson lashed out: “Enough is enough. We need the ultra-wealthy to pay their fair share so that we can fund a world-class public transit system.”
For Johnson, the problem is always the same, and so is the solution: the rich don’t pay enough, and raising their taxes is the answer to everything. It’s a familiar refrain rooted in ideological comfort, not fiscal reality.
The mayor seems unwilling – or unable – to grasp the scale and complexity of Chicago’s financial crisis. The city is simultaneously battling three historic fiscal emergencies: in the city budget, in the schools and in public transit. Much of this crisis has been exacerbated, not alleviated, by Johnson’s refusal to address unsustainable spending or break with the financially ruinous agenda of the Chicago Teachers Union.
Since 2019, city government spending has surged by $6.6 billion – a staggering 62% increase. Chicago Public Schools spending per student has soared nearly 40%, even as enrollment dropped 9%. The CTA’s budget has grown by 40% since 2019, despite only recovering 68% of pre-pandemic ridership.
Despite receiving nearly $6 billion in federal bailout money, the city, CPS and CTA all continued raising taxes and fees, rather than scaling the systems for post-pandemic budgets and demand.
When Johnson blames the wealthy for CTA’s woes, he conveniently ignores the $2.2 billion in one-time COVID aid the agency received and squandered while still hiking its budget by 40%. What, exactly, did “the rich” have to do with that?
The truth is high taxes – not a lack of them– are driving residents and investment away from Chicago and Illinois. Poll after poll, former Illinoisans cite taxes as the No. 1 reason they left, followed by economic opportunity and crime. Half of current residents say they would leave the state if they had the means to do so.
Illinois’ tax climate punishes everyone. Chicago sales tax is second only to Seattle. Commercial property taxes are second only to Detroit. Illinois is set to impose the nation’s highest state and local tax burden in 2025, costing the average household $13,099, or 52% more than the national average. Property taxes alone have climbed annually since 2019, with CPS increasing its levy by over $500 million.
What’s been the result of this worsening tax climate? Since 2012, Illinois has netted a loss of nearly 60,000 taxpayers making more than $200,000. The wealthier you are, the easier it is to move.
In 2022, Illinois was the second-biggest loser nationally of households aged 26 to 35 with incomes greater than $200,000. Not only is this an immediate loss of taxable income, but it’s also bad for the future of the state: these are young taxpayers with the greatest potential for growth.
While Illinois lawmakers passed another record-high budget full of tax hikes, sweeps and gimmicks, many neighboring states cut income taxes permanently. The gap between Illinois and our neighbors is stark, with tax savings of up to $5,315 for those who leave. Unsurprisingly, Indiana and Wisconsin are among the top destinations for Illinois’ outbound population.
Johnson’s fixation on the “ultra-wealthy” ignores the long-term damage this mindset is causing. Illinois ranks last among states in equity when measuring factors such as poverty, homelessness, labor-force participation, homeownership, median annual household income and unemployment. So much for Illinois’ progressive agenda.
Chasing high earners out of the state means fewer jobs, fewer investments and lower tax revenues. The affluent are the most mobile group in society, and they are leaving Illinois in ever-greater numbers.
The story of Ken Griffin – formerly Illinois’ wealthiest resident and a major donor to the city’s cultural life – is a case in point. Griffin reportedly paid over $1 billion in state income taxes during the past decade. Since his move to Florida, he has shifted not just his business operations but also his philanthropy. Illinois benefitted from more than $650 million in Griffin’s charitable donations, including $130 million to 40 Chicago organizations. Florida is now the recipient of over $300 million in donations since his departure.
And he didn’t leave alone. Griffin’s 10,000 employees, their salaries and their purchasing power left with him. His story illustrates how just one person’s departure can mean the loss of hundreds of millions in tax revenue and economic activity.
Trying to close budget gaps by squeezing high earners might sound like social justice to some, but in practice it backfires into social disintegration. Unless there is a political and fiscal course correction, Illinois will continue to lose people, income and opportunity.
Taxing the rich may be a popular slogan, but it is a damaging reality.