Page 1 - Are North Siders fleeing 1.21.20.docx

Are North Siders fleeing?

With voters set to decide on progressive income tax, Illinois wealth flight among worst in the nation

By Orphe Divounguy and Bryce Hill

Have moving vans appeared on your Lincoln Park or Gold Coast block?

While recently released data from the U.S. Census Bureau revealed Illinois was home to the nation’s worst loss of residents to other
states over the decade, new IRS data shows those leaving the state are taking billions of dollars with them.

For tax year 2018, that amounted to a net loss of up to $5.6 billion in adjusted gross income to other states, with each person leaving
earning on average $18,000 more per tax return than those who moved into Illinois.

The new data also shows Gov. J.B. Pritzker’s biggest policy priority of 2020 – a $3.4 billion progressive income tax hike that voters
will approve or deny in November – would increase taxes on the Illinoisans already most likely to exit the state, leaving middle-class
residents to pick up the tab.

High-income earners leaving Illinois the fastest

The IRS data reveals who is making up the bulk of the exodus from Illinois, and some of them are your North Side neighbors. Of the
2018 income tax returns that Illinois lost on net, 24,834 (58%) of them were prime working-age Illinoisans between 26-54, as has been
the case for the entire decade.

IRS data also shows that while Illinois is losing residents of all income brackets to other states, the Illinoisans departing at the fastest
rate are higher income earners.

In fact, Illinois is losing people earning more than $200,000 a year at nearly twice the rate of average-income residents.

The only state to see a higher share of residents making more than $200,000 leave in tax year 2018 was New York. Gov. Andrew
Cuomo put it this way: “‘Tax the rich! Tax the rich! Tax the rich!’ We did. Now, God forbid, the rich leave.”

These numbers become even more stark when you compare the size of the flows in and out of the state by income group. The data
reveals Illinois is losing more than twice as many wealthy residents as the state is attracting. In fact, the higher the income level, the
larger the gap between Illinoisans who leave and those who come in.

This may explain why many local realtors say that the high end of the Chicago housing market - at $500,000 and above - has flatlined.

The highest income bracket reported by the IRS is $200,000 and up. Pritzker’s progressive income tax proposal would hike taxes on
those earning $250,000 and up. But without spending reform, Illinois will be forced to hike income taxes beyond Pritzker’s introductory
rates.

Outmigration continues

Illinois saw a net loss of 43,498 tax returns to other states in tax year 2018, representing a net loss of 87,882 residents, as measured
in exemptions from the IRS data release. Illinois lost residents to 43 out of 49 states on net.

Illinois gained residents on net from Vermont, New York, Louisiana, Pennsylvania, Connecticut and New Jersey, but the gain was
only 191 income tax returns.