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Illinois Policy:

Here are four reasons why Illinois cannot weather another tax hike:

1. Illinois’ battered economy is extraordinarily weak compared to other states.
   • Illinois finished 2016 with the worst jobs growth rate and largest manufacturing jobs losses in the region.
   • Moody’s notes that four Illinois metro areas are currently in recession, and four more are near recession. Tax hikes would exacerbate and worsen Illinois’ already weak economy.
   • Illinois’ downstate economy never recovered from the previous recession, with 42,700 fewer jobs than before the Great Recession.
   • realtytrac.com notes that nearly 20 percent of Illinois homes are deeply underwater on their mortgages, the second-worst in the U.S. The Chicago area is projected to have the worst housing market in the U.S.
   • The state population was growing before the last tax hike. This time it is shrinking.

2. Taxes are already going up all over the state.
   • The current income tax rate is still 25 percent higher than it was in 2010.
   • Chicago recently raised taxes by $1,000 per household with more on the way, and a Cook County sugar tax to top it off.
   • Twenty local governments increased sales taxes for 2017. Meanwhile, downstate governments are seeing sales tax revenue decline despite higher tax rates.
   • Countless local governments continue hiking property taxes.
   • The ongoing tax hikes and debt issuances will likely lead to a fiscal contagion as there will be too few taxpayers to service all the debt.

3. Out-migration has hit record levels – and more taxes will push more people out of the state.
   • Illinois is losing one Peoria worth of people (114,000) each year due to out-migration, the worst the state has ever experienced.
   • Illinois’ state population has shrunk three years in a row due to so much out-migration.
   • A Paul Simon Institute poll finds that the most common reason people want to leave Illinois is due to high taxes.
   • Millenials and prime working-age adults are leaving Illinois fastest. The exodus rate from Illinois is multiples of all surrounding states.
   • Illinois loses population, on net, to every other state in the region according to both Census and IRS data.

4. The 2011 tax hike did not fix Illinois’ financial problems, and was followed by economic weakness and significant and ongoing wealth-flight.
   • Illinois’ 2011 tax hike raised more than $30 billion in new revenues for pensions. Yet, the state’s unfunded liability grew by $47 billion.
   • Illinois’ average annual loss $2.2 billion per year for 16 years prior to the 2011 tax hike. The loss was $3.6 billion per year during the tax hike. Chicago is the only American city experiencing millionaire flight.
   • The average income of a taxpayer leaving Illinois is $77,000 compared to a $57,000 average income for taxpayers entering Illinois. This $20,000 in-out differential is the worst of any state.
   • Moody’s analysts have thus warned of an Illinois death spiral.