University of Illinois professor and, I assume, tax payer Larry Ribstein weighs in on the lame duck tax increase his state legislature just rammed through:
Detroit would seem to be a good example to keep in mind when thinking about Peoria without Caterpillar. Remember that any company considering moving to or staying in Illinois not only has to pay corporate-level taxes, but has to pay its executives about $4,000/year more just to make up for Illinois income taxes in order to provide the same compensation as it did last year.
Obese states should remember that the best way to lose weight is to stop eating. This will lead to reduced services, which will anger voters. But the tax “solution” will drive out the most mobile residents and investors. It’s not pretty, but unfortunately for profligate governments, push has come to shove.
There is evidence that high state tax rates do have modest but statistically significant effects on migration, with elderly taxpayers being especially likely to flee high tax jurisdictions. Illinois thus may find that its tax revenues don't go up as much as expected if the sheep flee before the state can shear them.
