I’ve lived on and off in the state of Illinois – more specifically the Chicagoland area – for almost a decade now. And while I can’t say I’ve ever been a real fan of the state, it does have its perks; government fiscal responsibility however, doesn’t seem to be one of them.
According to a recent MSN Money article regarding the states that people are fleeing in 2014, it appears that Illinois is among the top contenders. The article notes, “Illinois, No. 2 on the list, with 61 percent more people moving out than in, has a depressing story to tell.”
Being a resident, I’d have to agree. And it has me wondering, is it time to flee Illinois?
Income tax hikes
In 2010, Illinois lawmakers approved a “temporary” income tax increase, raising the rate from 3 to 5.25 percent. While this might not sound like a big hike, consider that on every $10,000 earned (without taking deductions and exemptions into account), that’s an additional $225. On an income of $50,000, it’s over an extra $1,000 annually.
According to NBC Chicago though, “Illinois’ temporary income-tax increase that’s set to expire at the (end) of 2014 may not be going anywhere anytime soon, according to a report from the Chicago Tribune.” They note that, “If lawmakers allow the tax increase to expire as scheduled, the state will lose about $5 billion a year, the report states, with or without last week’s approved pension plan.”
This means that Illinois residents might be looking at higher income tax bills for the foreseeable future.
Property tax increases
Property taxes can go up due to a variety of factors. For our little burb this year, it was an increase in costs at our local library, but the increase only upped our expenses in this area by a few dollars. The problem with this is two-fold though. These “little increases” seem to pop up regularly in the Chicagoland area, pushing our tax bill higher. Not only this, but the recent “phase out” of an expanded homeowner exemption for property owners pushed many tax bills up by hundreds and even thousands of dollars.
High unemployment and decline of property values
Sadly, while taxes are going up, property values and employment levels in Illinois have dropped dramatically. While home values may be up compared to the lows after the housing market implosion, in the majority of suburbs around the Chicagoland area, they are still well below where they were during the heights of the housing boom.
Pair this with a high unemployment rate, and our family is beginning to reconsider our Illinois residency. NBC Chicago reports, “New statistics from the U.S. Department of Labor show that at 8.6 percent, Illinois continues to have one of the highest unemployment rates in the nation.” It goes on to note that, “Worse, a recent report by the Pew Charitable trusts projected Illinois would be dead last among 50 states for job creation in 2014.
The report suggests the state will add a paltry 57,000 jobs during the year, for a growth rate of less than one percent.”
While we’re not ones to cut and run from a tough situation, Illinois is making it harder and harder for us to stay put.
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The author is not a licensed financial or tax professional. This article is for informational purposes only and does not constitute advice of any kind. Calculations have not been verified by a professional. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.