Surprise! Illinois Millionaires Don't Like 'Millionaire Tax' Idea

ANALYSIS -- Millionaires understandably do not appear to favor Illinois House Speaker Mike Madigan's 'Millionaire Tax,' a state income tax surcharge of 3% on all incomes of over $1 million dollars.  Madigan says the money would be used to fund public education.

In the days since he proposed it, some Illinois millionaires including Republican Gubernatorial nominee Bruce Rauner have voiced their opposition to the idea.  Some Republicans are labeling it 'class warfare'.  Others have broached the idea that the millionaire tax would hurt everyone by chasing wealth out of Illinois.  The conservative blog wrote a headline on the topic that read, 'Illinois Lawmakers to Millionaires: Get Out!'

It's a flawed argument because there is no evidence to back the claim up.

The case study for the impact of the millionaire tax is New Jersey, a high tax state like Illinois which implemented its own 'millionaire tax' and taxes the wealthy at a higher rate than even Madigan is proposing.  The result?  New Jersey has even more millionaires now than when the tax was implemented, and the second highest percentage of millionaires of any state in the nation (Maryland is #1).

A Princeton University study looked at the impact of the New Jersey tax on millionaire migration out of state, and concluded if the tax had any impact at all, it was minimal (a link to the study is below).

The fact is that most every state has a 'millionaire tax' in that they tax the rich at a higher income tax rate.  That includes neighboring Wisconsin and Iowa, which both tax millionaires at around the level Madigan is proposing.  Illinois is a rare exception because it is one of the few states with a flat income tax structure.

The brilliance of Madigan's millionaire tax idea is that it provides a good deal of political and monetary capital with little risk of any political or economic cost.  It's even more potent politically for him if Republicans, and especially Rauner, vocally attempt to stand in its way.

Princeton millionaire tax study:  

More Stories

Don't Miss

Latest News

Video Center