Wisconsin

This road sign which welcomes people entering Wisconsin has beckoned many an Illinois resident recently. U.S., Census Bureau data shows that about 40 residents per day are leaving Illinois to relocate there. 

Illinois lost 114,000 people on net to other states, or roughly 313 residents per day according to U.S. Census Bureau data.

The state’s outmigration crisis is because of primarily working-age residents between the ages of 25 and 54 looking for work elsewhere.

From July 2017 to July 2018, Illinois’ population shrank by more than 45,000 people, behind only New York for the worst raw population decline in the nation.

It was the fifth straight year of population decline. Only West Virginia has reported more consecutive population declines of six consecutive years.

Since 2014, when Illinois’ population decline began, the state has lost more than 157,000 people — or the equivalent to losing one of its largest cities.

Democratic Gov. J.B. Pritzker’s budget proposals this year included 19 taxes and fees totaling $6.9 billion, according to the Illinois Policy Institute.

By increasing taxes, Pritzker argues, his plans would give tax relief to 97 percent of taxpayers.

Yet, residents continue to leave. Among them, about 40 move to Wisconsin every day. A new policy brief Leaving Illinois for Wisconsin by the free market think tank, the Badger Institute, notes that Illinois’ loss is Wisconsin’s gain.

“On net, Wisconsin has gained 116,000 Illinois residents between 2006 and 2017, an average of nearly 40 residents every day from 2014-’17,” according to the report.

The key to the migration pattern, the institute notes, is Wisconsin’s lower tax burdens, less regulation, greater fiscal stability, right-to-work laws and resisting calls for higher minimum wages.

University of Michigan-Flint economist and American Enterprise Institute scholar Mark J. Perry, the author of the study, compared both states across 14 metrics including measuring fiscal health, economic growth, various tax burdens, business climate and labor markets. Wisconsin beat Illinois in 13 out of 14 categories.

The one category where Illinois came out on top was its flat income tax rate is lower than Wisconsin’s top, progressive rate. Wisconsin’s top rate is 7.65 percent compared to Illinois’ flat 4.95 percent. Illinois top rate could increase to higher than Wisconsin’s if voters approve a constitutional amendment in November 2020 to allow for a progressive income tax system where higher wage earners are assessed higher rates.

“It’s an important reminder to our new governor and to Republicans in the Legislature,” Michael Jahr, SVP at the Badger Institute, told The Center Square.

“Now is not the time to backtrack on the policies and reforms that have gotten us here,” he adds. The Institute argues that if Wisconsin wants to make itself even more attractive to businesses and residents of high-tax states, its leaders should address the one area where Wisconsin is not competitive: its income tax structure.

Perry notes that the state-to-state migration pattern “clearly illustrates why public policy matters.”

“Illinois has layers of burdensome policies that make it unattractive to businesses and workers,” he says. “In contrast, Wisconsin has benefited from common-sense reforms in recent years that contributed to economic growth and overall fiscal health. If Wisconsin wants to attract even more businesses and workers, it should reduce its income tax burden, the one area we compared where Illinois actually has an advantage.”

A Moody’s Investors Service report earlier this year identified Illinois’ top fiscal challenges in 2019: “massive” pension debt, “chronic” annual deficits and the repercussions of many years of outmigration.

This year, Illinois lawmakers doubled the state’s gas tax to 38 cents a gallon and increases other fees to pay for the state’s first infrastructure spending plan ($41.5 billion) proposed in more than a decade. The doubling of the state’s motor fuel tax is estimated to cost residents $100 annually, which will grow every year with inflation.

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