Illinois repeats the progressive taxation error

New York governor Andrew Cuomo recently bemoaned the $2.3-billion revenue shortfall for the State of New York.  "Tax the rich, tax the rich, tax the rich.  We did that.  God forbid they leave."  In New York, the top 1% fund 46% of the state's income taxes.  In 2016, New York lost 186,000 residents, with the vast majority of people moving to no-income-tax Florida.  In California,  another leading outmigration state, a net one million people left over the last 10 years (130,000 in 2017 alone), with the vast majority moving to no-income-tax Texas.  The top 1% fund 48% of California's income taxes.

Here in Illinois, the top 1% fund 23% of income tax revenue — due to our flat income tax rate.  According to United Van Lines (January 2019), 43% of those leaving Illinois earn over $150,000 per year.  In case you didn't know it, Illinois is second to New Jersey in outmigration on a per thousand basis.  Do we really believe that moving to a progressive tax structure is going to encourage those who overwhelmingly fund Illinois to stay when 114,000 people left Illinois in 2017?  Is a business going to start up in Illinois when other states will give it a competitive advantage in our interconnected world?

The driving force behind Illinois's fiscal nightmare is the pension nightmare.  We created this fiscal nightmare by electing politicians who sell fear and envy.  It can be dealt with in two ways.  The first is having all new hires placed on a defined contribution plan.  (Wouldn't you rather have ownership of your fully funded defined contribution plan that has participated in an exploding stock market for the last ten years than a 37% funded defined benefit plan?)  The second is honoring our commitment to all state employees and paying their retirement benefits.  We must cap the pension problem.

When are we going to learn that there is a relationship among outmigration, taxes, and freedom?  When are we going to learn that politicians sowing fear and envy are corrupting our society?  In a time of abundance, isn't this the best time to right-size the Illinois budget?  When are we going to learn from the mistakes of New York and California?

New York governor Andrew Cuomo recently bemoaned the $2.3-billion revenue shortfall for the State of New York.  "Tax the rich, tax the rich, tax the rich.  We did that.  God forbid they leave."  In New York, the top 1% fund 46% of the state's income taxes.  In 2016, New York lost 186,000 residents, with the vast majority of people moving to no-income-tax Florida.  In California,  another leading outmigration state, a net one million people left over the last 10 years (130,000 in 2017 alone), with the vast majority moving to no-income-tax Texas.  The top 1% fund 48% of California's income taxes.

Here in Illinois, the top 1% fund 23% of income tax revenue — due to our flat income tax rate.  According to United Van Lines (January 2019), 43% of those leaving Illinois earn over $150,000 per year.  In case you didn't know it, Illinois is second to New Jersey in outmigration on a per thousand basis.  Do we really believe that moving to a progressive tax structure is going to encourage those who overwhelmingly fund Illinois to stay when 114,000 people left Illinois in 2017?  Is a business going to start up in Illinois when other states will give it a competitive advantage in our interconnected world?

The driving force behind Illinois's fiscal nightmare is the pension nightmare.  We created this fiscal nightmare by electing politicians who sell fear and envy.  It can be dealt with in two ways.  The first is having all new hires placed on a defined contribution plan.  (Wouldn't you rather have ownership of your fully funded defined contribution plan that has participated in an exploding stock market for the last ten years than a 37% funded defined benefit plan?)  The second is honoring our commitment to all state employees and paying their retirement benefits.  We must cap the pension problem.

When are we going to learn that there is a relationship among outmigration, taxes, and freedom?  When are we going to learn that politicians sowing fear and envy are corrupting our society?  In a time of abundance, isn't this the best time to right-size the Illinois budget?  When are we going to learn from the mistakes of New York and California?