Illinois Lawmakers to Millionaires: Get Out!
In what appears to be part of a full-fledged class warfare strategy that includes comparing Republican gubernatorial candidate Bruce Rauner to C. Montgomery Burns of The Simpsons, Illinois Democrats propose a referendum on imposing a "millionaires tax" targeted at high-income state residents. In a state that has already enjoyed government credit downgrades with little expectation of improvement for poor habits, including putting off paying its bills into the murky future and not funding public pensions, the move could raise fears that politicians plan to resolve their own failures by mugging anybody with assets to speak of (not that it's easy to accumulate assets in Illinois). It just could send the targets of the millionaires tax heading for the exits, as they've already done in New Jersey.
Earlier this year, financial firm RegentAtlantic reported that New Jersey is suffering a net loss of taxpayers and adjusted gross income to lower-tax states, and that "the average income coming into New Jersey is approximately 50 percent less than the income that is leaving." Overall, the company found that the state lost taxable income of $5.5 billion in 2010 as residents moved to relative tax havens.
Note that New Jersey ranks at 44 out of 51 jurisdictions in WalletHub's recent ratings of tax burdens (1 is the least burdensome). Illinois comes in at 47.
By contrast with New Jersey, Stanford University reports that high tax rates don't drive the highest earners to flee California. But Illinois doesn't quite have California's natural attractions, for which wealthy people may be willing to pay a premium.
And California is still hemorrhaging money and people as many seek tax relief and opportunity, even if millionaires are willing to stick around for the nice views. If Illinois can't find itself some redwoods and pretty coastline, and quick, look for a line at the exits.