Thanks to the mass exodus of citizens from the Land of Lincoln, Illinois has dropped from the fifth most-populous state in the union to sixth. According to Chicago’s WGN TV, it’s due largely to the state taxing them out of their homes.
Over the last two years, more than 70,000 people have left Illinois for warmer and more tax-friendly climes such as Texas, Florida, and even South Dakota and Wyoming. In fact, Chicago is the only city in the United States that has consistently lost citizens over the last five years. The so-called “U-Haul index” — a measure of the difference in rates charged for outgoing rental trucks versus incoming trucks — rates Illinois as number one for outbound moving vans.
They are no doubt getting out while the getting is good. Many of the state’s 656 public pension plans are so far underwater that the state passed a law allowing something called an “intercept,” which allows pension boards to raid a delinquent municipality’s state income tax funds. The municipalities of Harvey and North Chicago have already suffered the indignity, and the pain, of having funds siphoned off to make those delinquent pension-plan contributions. Eric Harper, an associate director with S&P Global Ratings, understated the potential crisis: “Should the intercept law’s use become commonplace, significant credit strain could result.” This is code for: Taxes on taxpayers living in those municipalities that have failed to make pension contributions will be going up. Conclusion: it’s time to get out of Dodge.
And not just out of Illinois, either. With the passage of tax reform, high-income earners will no longer be able to take state and local tax deductions, making their cost of living in high-cost states such as California and New York even higher.
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