Chicago City Wire

The state of Illinois ranked second only to New York among states that are experiencing the highest numbers of resident flight, according to a new study, and more may be on their way out after the November election.

“There are quite a few folks with a six-figure pension that are already planning on leaving Illinois,” said Andrew Nelms, senior adviser for Americans for Prosperity Action-Illinois (AFP-IL).

The Illinois Policy Institute blames high taxes for the exodus, noting data that shows mostly working-age adults are leaving the state.

“We're slowly experiencing the worst-case scenario over the course of decades,” Nelms told the Chicago City Wire. “Politicians have made bad decision after bad decision and they have led us to be such an outlier in so many ways. We have the highest unfunded public pension liability and the lowest credit rating of any state in the nation. We also have the highest combined state and local taxes and are considered a least tax-friendly state.”

Despite the exodus of residents, the Illinois Policy Institute reports that lawmakers are asking residents to approve a $3.7 billion progressive income tax hike Nov. 3, which the institute expects to result in higher taxes and more resident departures.

“Illinois currently does not levy state income tax on retirement income so it’s tax-free at the state level, which is one of the very few bright spots on the Illinois tax horizon, and one of the only things that keeps retired folks from leaving is the fact that their retirement income isn't taxed by the state,” the institute said

But that could change on Nov. 3 if voters approve the Joint Resolution Constitutional Amendment No. 1, which would open the way for the Fair Tax proposal to replace the state’s existing flat income tax.

“It includes an unusual, what's called a recapture provision, where a person's total income would be taxed at a flat rate if they cross the threshold and enter that highest bracket,” Nelms said in an interview. “Fundamentally, however, the chief concern here is how this could affect the middle class.”

The current flat rate was instituted in 1969 and stands at 4.95% for individuals. As previously reported, proponents of the Fair Tax argue that it would force the wealthy to pay their fair share of taxes. Illinois' Democratic Gov. J.B. Pritzker introduced the Fair Tax, also known as a graduated or progressive tax rate, because it would reportedly earn the state $3.4 billion in added revenue.

“It increases taxes on the wealthy, absolutely, but they say that this would only affect 3% of people and that if you earn less than $250,000 a year, you have absolutely nothing to worry about but accepting the assurances and the promises of Illinois politicians is something that voters should approach with extreme skepticism given our politicians track record of breaking promises that they've made to us," Nelms said. "The only reason proponents of the progressive income tax hike are able to say that anybody would be paying the same or less under this proposal is because of the last tax hike.”