"J.B. Pritzker Chicago Hack Night" by Chi Hack Night licensed under CC
Even as it has become increasingly expensive to live in Illinois, the government, rather than take action to decrease spending, has decided to double down on its high-tax inclinations.
Voters this November will decide whether they would like the legislature to consider a 3% income tax hike on income over $1 million. Since the question is advisory only, it does not have force of law until the legislature refers a constitutional amendment to the ballot in a future election. But Illinois’ addiction to excessive spending won’t be solved by ditching the state’s popular 5% flat tax.
One report from Illinois Policy found that Gov, Pritzker’s final 2024 budget came in at $410 million over its already record-setting $53.1 billion spending plan. Illinois does not have a revenue collecting problem, they have a spending problem. In fact, the state government already raised taxes to the tune of $1.1 billion this year. Voters know that even though the new tax might start with millionaires, one day politicians will come after their wallets, too.
As recently as 2020, voters have rejected this disastrous tax. While Illinois voters elected Joe Biden with 16-point margin, those same voters shut down this tax, in favor of keeping the 5% flat tax, by a 9-point margin. Regardless of politics, flat taxes are popular to the average voter. Flat taxes have become increasingly popular, in the past 5 years Arizona, Mississippi, Iowa, Georgia, and Idaho all transitioning to flat taxes.
High earning residents can choose to move out of state if they want to escape liberal tax traps for more economic freedom. Illinois already has an existing problem with this: the CATO Institute notes that Illinois has the worst net migration rate of high earners in the entire country. After the 2020 census, Illinois lost a congressional seat as a result of this accelerating trend. With a higher income tax, people and dollars will continue flowing out of Illinois, leading to higher deficits and higher costs for lower- and middle-class families.
This can be seen in Massachusetts, where a millionaire tax was narrowly approved by voters in 2022. Many residents are moving to other New England states, like New Hampshire, which has no income or sales tax. One study by Boston Indicators even noted how “[more] middle- and high-income residents are leaving the state that at any point in the last 20 years.”
If high earners do leave the state, it can have crippling effects to Illinois beyond simply the economy. One study from Philanthropy Roundtable noted “about 30,000 Illinois who make more than $1 million (the group being targeted by this new tax proposal) gave about $6 billion to charity in 2021, or almost 60% of all charitable donations.” If these high earners choose to leave the state, it will destroy the charitable contributions intake of many important causes.
High earners have the ability and resources to move to states with more favorable tax policy. Instead of pushing them away, states should incentivize individuals and companies to invest in their state economy and build a flourishing economic environment that attracts new businesses and families. Illinois residents will have no problem moving to surrounding states like Iowa, Indiana, and Missouri, which have all significantly reduced income taxes in recent years and are aiming for eventual elimination of the income tax.
Illinois voters need it to decide if they want easy solutions that will not solve any actual problems or look at the root cause of their high cost of living and hold their elected officials accountable.