Who leaves Illinois, and where do they go?
Illinois has a population problem. Late last year, the Census confirmed that the number of people living here declined for the fourth consecutive year, enough to drop the state from fifth-largest — a position it had held for decades — to sixth, behind Pennsylvania.
Illinois’ population decline is related to several factors, including an aging population and low birthrate. But by far the factor that gets the most attention is migration: the fact that more people leave Illinois than choose to come to it. For many on all sides of the political spectrum, Illinois’ net outmigration has become a cudgel for their preferred policies.
But in a Budget Blog post last year, CTBA found that some of the most basic assumptions about migration in Illinois are wrong. Perhaps most strikingly, Illinoisans are actually less likely to leave their state than the average American. Our net outmigration problem, it turns out, is all about how few people choose to come here — not how many of us leave.
The Budget Blog is revisiting the migration issue in part because of a line from the Chicago Tribune’s latest editorial on the subject. The editorial profiles three families who chose to leave middle-class or affluent Chicago suburbs for elsewhere in the United States. One of families tells the Tribune that for relatively high-earning households, Illinois taxes are just too much to bear:
“I was paying more than my fair share,” he said. “I don’t see any way out (for Illinois). People making $100,000 or more are just going to leave. They’re all looking at northwest Indiana to get away from the taxes.”
So we wondered: Are people making $100,000 or more especially likely to leave Illinois? And are they especially likely to go to northwest Indiana?
In a word (or two): no, and no.
Illinois’ migration troubles are concentrated among those making less than $50,000
In Illinois, each of the income categories we examined saw net domestic out-migration, meaning more people left Illinois for elsewhere in the US than arrived here from other states. On its own, that’s not surprising: Illinois has had negative overall net domestic migration for nearly a century, even when its population was booming, as we explained in our previous post. (One big reason is that Illinois has long relied on international immigration and new births for its population growth.)
But Illinois’ greatest losses aren’t among those making over $100,000 — not even close. From 2012 to 2016, on average, for every 1,000 people making six figures or more, Illinois lost 4.6 of them to domestic migration each year. In contrast, that figure was more than doubled for people making under $25,000, at 10.6 per 1,000, and hit a substantially higher 9.1 per 1,000 for people making between $25,000 and $50,000.
Indeed, Illinois’ migration losses are least severe in what we might think of as the “middle class” categories, between $50,000 and $100,000.
High-income Illinoisans who leave seek haven in low-tax…New York
But where do those high earners go? Are they all fleeing to northwest Indiana to avoid Illinois taxes?
They are not. The top destination for households making over $100,000 is actually the New York City metropolitan area — hardly a low-tax oasis. Houston is second, with the top six rounded out by Los Angeles (where the top state income tax bracket is 13.3 percent, versus 4.95 percent in Illinois); Minneapolis-St. Paul (where it’s 9.85 percent); Denver (4.63 percent) and Washington, DC (8.95 percent). Only then do we reach northwest Indiana, in seventh place.
Overall, high-income Illinoisans’ top out-of-state destinations are a mix of low-tax usual suspects in the Sun Belt (Houston, Dallas, Atlanta, Nashville) and places you’d probably steer clear of if you were moving to find low taxes (four metropolitan areas in California, New York, Minneapolis-St. Paul, Washington). This makes sense: As we wrote in our last post, migration experts generally say that taxes rank low on the list of reasons that people move, far below things like job opportunities, being close to friends and family, or overall cost of living, which is often more affected by housing costs than state and local taxes.
