A Gallup poll released last week found that half of residents in Illinois would move if they could. Half? Runner up states were Connecticut (49 percent) and Maryland (47 percent). What’s going on? Reading further down, it appears that for those in these states who are actually planning a move to another state in the next 12 months, the majority cite work and business-related reasons. For Illinois, the second most-cited reason was the weather (evidently global warming has not reached this state just yet). Further on down the list was taxes, cited by 8 percent. Additionally, 8 percent of Maryland residents and 6 percent of Connecticut residents identified taxes as a reason for their planned relocations.
Are taxes in these states that bad? If so, which state is the worst? Let’s take a look. Using the NCPA’s State Tax Calculator (www.whynotmove.org), I compared a 40-year old married homeowner earning $100,000 a year to his counterparts in Maryland and Connecticut. The results?
- The Illinois resident would actually benefit by moving to high-tax Maryland. Assuming he owns a house valued at $300,000 and buys the same priced house in Maryland, he would have an additional $3,600 a year in discretionary income. If this income were saved and invested, he would have an additional $300,000 in lifetime wealth at age 100.
- If the Illinois resident instead moved to Connecticut, he would do a little better, but not much. He would have an additional $879 in discretionary income annually and almost $73,000 in additional lifetime wealth at age 100.
What is particularly surprising is that the Illinois resident would even fare better moving to New York (a state where 15 percent of residents in the Gallup poll cited taxes as their reason for moving).
The moral of the story? Illinois is truly a high-tax state and sadly, it lags behind its Midwestern counterparts in job creation. (See the Chicago Tribune article, “Why Illinois Job Creation Lags,”). Perhaps the powers-that-be should stop dithering over plastic bags and focus on the health of their economy.