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* Property taxes aren’t based on an ability to pay, and folks have been attempting to make that tax more “progressive” for a very long time. Mayor Emanuel’s proposed property tax hike is a big step in that direction. From Greg Hinz…
At a council committee hearing this week, the mayor’s financial team released a revealing “fact sheet” on the pending tax/homestead plan that disclosed fascinating new details.
The most significant section, tucked into a paragraph in the middle of three charts on Page 2, says: “Homeowners living in homes valued at $250,000 or less will see little or no increase and most—nearly 290,000—will see a decrease in their overall bill.”
An accompanying chart spells that out. For instance, in the first year of the tax hike (the levy would be phased in after four years) the owner of a home worth $200,000 would see their tax bill drop to $3,054 a year from $3,260. Three years later—after the full hike is levied, and with the mayor’s proposed homestead break in effect—that owner still would be paying $65 a year less than now, assuming no other changes. […]
I can report that well over half of city taxpayers apparently would have their bill cut under the mayor’s plan, which is pending in Springfield. According to Cook County Assessor Joe Berrios’ office, 419,153 Chicago homeowners applied for the homestead exemption in the most recent tax year. Almost three-quarters of them—291,755 to be exact—had property worth less than $250,000.
Hinz is upset about this and I think he has a right to be. Everybody ought to have some skin in the game when solving this fiscal mess. That’s not to say that those at the bottom should pay the full freight, but shouldn’t they pay a little something something?
posted by Rich Miller
Wednesday, Sep 30, 15 @ 3:01 pm
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If you’re poor you are paying plenty of sales tax on items you need for your job, for your kids, for that home!
Comment by Precinct Captain Wednesday, Sep 30, 15 @ 3:04 pm
===those at the bottom should pay the full freight, but shouldn’t they pay a little something something? ====
Hey, I’m someone who will be paying more but a lot of inner city people already pay a lot more just because of the neighborhood they are in. Gas prices are probably 75 cents to a buck more per gallon in the city than out in the burbs. The sales tax is high. Grocery store prices are more. And don’t forget that the schools have their own property tax levy and that will almost certainly go up for everyone.
Comment by Been There Wednesday, Sep 30, 15 @ 3:16 pm
I’m agreeing with Rich on this one. Everyone has to grab an appropriate sized oar on this one. These are property owners with a valuable asset. That’s not exactly “the poor”…
…any more than the person with the $260K home being “the rich”.
Can anyone else see just how much influence assessors are going to have here? Will people un-improve their homes to stay below $250K? Some neighbors may not like how others deal with the property on their block trying to beat this system. This is a complicated brew.
Comment by A guy Wednesday, Sep 30, 15 @ 3:28 pm
Since the Coook County Assessor appraised value (the value which I would imagine they will use) is actually less than the value of the home, I can’t see how he will get to that number with so many homes being exempt. I think Emanuel knows it won’t pass in Springfield and he can at least say “I tried to reduce the tax for working class….”
Comment by James the Intolerant Wednesday, Sep 30, 15 @ 3:44 pm
Wouldn’t an alternative solution, where everyone pays some, require compkely revamping how property taxes work in Illinois? Currently, people are assessed for 1/3 market value, the owner occupied exemption is deducted, and a fixed percentage from each taxing authority is applied to the valuw. It’s not that they couldn’t change fundamentally how it works, and maybe they should, but I suspect it’d be more complicated than raising the tax rate and increasing the exemption.
Comment by AC Wednesday, Sep 30, 15 @ 3:45 pm
I agree with A guy who is agreeing with Rich.
Comment by Norseman Wednesday, Sep 30, 15 @ 3:45 pm
Everyone has to feel some pain on this. Excluding all houses below $250,000 is ridiculous and counter-productive as it whacks people above the line, including huge numbers of middle-class people. $250,000 for a house in Chicago is exceptionally cheap.
Rahm, you’re taking the hit anyway. Please just be smart about it.
Comment by Chicago Cynic Wednesday, Sep 30, 15 @ 3:49 pm
=== Norseman - Wednesday, Sep 30, 15 @ 3:45 pm:
I agree with A guy who is agreeing with Rich.====
That must be incredibly liberating. No matter how you get there. lol. Rich is spot on here. As are we.
Comment by A guy Wednesday, Sep 30, 15 @ 3:50 pm
A guy wrote: “This is a complicated brew.” Agreed. Made even more complicated if you factor in those who are truly poor, yet are paying rent — in a four flat or a six flat which happens to be anywhere near that cusp of a total value of $250,000. I suspect this is so common on the westside, and also on the southside of the city. Will those landlords be tempted to do everything possible to stay below that line of demarcation? Including avoiding upgrades / add-ons / improvements / repairs / needed repairs? And, how many of the truly impovershed are actually renters, and not property owners?
Comment by Justin Observer Wednesday, Sep 30, 15 @ 3:56 pm
==Will those landlords be tempted to do everything possible to stay below that line of demarcation?==
If it works the way it does downstate, landlords would pay more in property taxes and consequently renters would pay more in rent regardless of value.
Comment by AC Wednesday, Sep 30, 15 @ 4:06 pm
Rich -
Folks at the bottom of the economic rung have plenty of “skin in the game.” Its called sales taxes.
Comment by Juvenal Wednesday, Sep 30, 15 @ 4:12 pm
===sales taxes===
The topic here is the property tax.
Comment by Rich Miller Wednesday, Sep 30, 15 @ 4:14 pm
There are currently 77 condos in Lincoln Park available for under $250K. So they get a tax break too?
Comment by nixit71 Wednesday, Sep 30, 15 @ 4:33 pm
==Since the Coook County Assessor appraised value (the value which I would imagine they will use) is actually less than the value of the home, I can’t see how he will get to that number with so many homes being exempt.==
So true. Plenty of people I know that live in the city could sell their houses for 250,000. NONE of them have an appraised value anywhere near that. All of these guys are doing quite well. So I guess unless you live in Lincoln Park or the like you’ll be saving money. LOL
Comment by CrazyHorse Wednesday, Sep 30, 15 @ 4:38 pm
The dems mantra—–take from those who have worked hard and smart and are at least somewhat successful.
Comment by anon Wednesday, Sep 30, 15 @ 4:39 pm
Absolutely everybody should have skin in the game. Shoving virtually all the new property taxes onto business will start a cycle that will hurt the very people who would get a pass now, as neighborhood stores and restaurants trim back or close, and jobs flee to lower cost destinations. Because of the “classification” system in place only in Cook County, commercial and industrial property is assessed at 2-1/2 times the rate of residential (in other words, there is already a huge tax shift onto business); this “tax cut” proposal hyper-charges that shift. Without skin in the game, these homeowners can demand more and more costly services (after all, they won’t be paying for them), while businesses reevaluate there locational fututes. If the tax base of Chicago ultimately diminishes as jobs leave, those who avoided the tax now will be stuck paying more later.
Comment by Anon Wednesday, Sep 30, 15 @ 4:51 pm
While the subject is property tax, the disproportionate burden of taxes on the poor and the middle-class can not be ignored.
Illinois must change our State income tax to a progressive income tax based on gross income, not the adjusted federal amount after deductions.
Ken Griffin doesn’t spend all of his income to survive and doesn’t incur sales taxes on the vast majority of his income. After his federal deductions Griffin has a much smaller tax burden percentage when compared to the poor and middle classes.
The poor and middle classes can’t afford to hire lobbyists and fund candidates to reduce their taxes.
Comment by Chicago 20 Wednesday, Sep 30, 15 @ 5:01 pm
Everyone property owner does have skin in the game. The question is who pays what.
Is someone making the argument that those with properties under $250K now pay less as in property taxes as a percentage of income or net wealth? That’s absurd.
Comment by Wordslinger Wednesday, Sep 30, 15 @ 5:06 pm
Tell us Chicago 20, how much does Ken Griffin pay in total taxes to the government. Not the %, the total amount he pays.
Comment by anon Wednesday, Sep 30, 15 @ 5:07 pm
Historically, the assessment system has been subjective and unreliable. The current system should be replaced with a new system that fairly appraises all of the property in Cook County. Then we can talk about whether an assessed value of $250,000 is a fair place to draw the line.
Frankly, I don’t trust the current assessed valuation so basing a huge tax break on a faulty system means some will get a break who don’t deserve it.
And as I mentioned previously and Hinz and others have noted, the fairest way to do this is to spread the pain around to everyone. Then maybe citizens will wake up and better understand how our finances got so messed up.
Comment by 47th Ward Wednesday, Sep 30, 15 @ 5:15 pm
Those who want to pay lower property taxes should buy a home that is closer to $250,000 instead of a home that is $2,500,000 or more…or they should buy fewer homes…or just buy a home they can afford.
Comment by Enviro Wednesday, Sep 30, 15 @ 5:17 pm
Anon-
I don’t know how much Ken Griffin paid in taxes last year. But I can tell you his wife said he makes $68.5 million a month.
If that is true Griffin would pay $2,568,750 per month in State income taxes, without any deductions or exclusions.
At last year’s rate it would have been $856,250 more per month.
Anon, maybe you can tell me how much of that $68.5 million a month gets spent and generating sales tax revenue?
Comment by Chicago 20 Wednesday, Sep 30, 15 @ 5:37 pm
For most folks the equity in their homes constitute most of their wealth. For lots of rich folks, their homes are a minor piece of their overall wealth. If we think of the property tax as a wealth tax, we can see that the richest among us have the biggest break of all. Most of their wealth is untaxed. How about a wealth tax to replace the property tax. That way everybody pays based upon how wealthy they are and how much they can afford
Comment by Truthteller Wednesday, Sep 30, 15 @ 5:39 pm
Some will argue that poor people need to “pay their fair share” or “have skin in the game” in regards to taxes, especially the flat income tax. Poor people pay a lot of taxes and fees. In fact, Illinois has one of the least progressive tax systems in the nation. http://www.itep.org/whopays/
When I hear arguments for taxing the poor I am always reminded of the story of the “widows mite.” Who pays more taxes? The poor that pay out of their livelihood or the rich that pay from their abundance?
Comment by Anonymous Wednesday, Sep 30, 15 @ 5:47 pm
They’re making the system more complicated and still not solving the problem. This looks like junk policy to me.
Comment by NoGifts Wednesday, Sep 30, 15 @ 6:28 pm
Under 250,000….they don’t go down to zero do they?
Comment by sideline watcher Wednesday, Sep 30, 15 @ 6:56 pm
Everyone should pay. Everyone. Legislators on the NW and SW side will not be able to defend this to their constituents. Most who are not policeman and fireman. Everybody should pay and stop the freeloading.
Comment by Anonymous Wednesday, Sep 30, 15 @ 10:18 pm
My home is valued at less than $250K. I look forward to paying less in property taxes. Especially since I paid $260 in stoopid tickets this summer.
Comment by Emily Booth Wednesday, Sep 30, 15 @ 10:37 pm
So Chicago 20, let’s say your figure is correct, Griffin pays $2.5 million per month to the state. Let that sink in for a minute.
I will go out on a limb and say the majority of posters here never pay that much in a lifetime to the state of Illinois. But, people like you want more and more from this guy. How many state services, and people, does his guy support each month.
Why don’t you and your friends pay more? Do you pay 5% to the state or do you pay 3.75%? What figure do you pay to the state each month?
Comment by anon Thursday, Oct 1, 15 @ 7:00 am
OK Rich you want civilized and smart? Check this out. This piece and all these comments about Rahm’s gambit on behalf of sub-$250,000 Chicago homeowners (about which I share your doubts) are a distraction from what really matters. They lose sight of the forest for the trees.
What should concern us is this. Last January Governor called for shared sacrifice at his inaugural. This was the right idea, certainly the only way we can get ourselves out of the financial we created for ourselves. So why is no one even talking about shared sacrifice today? Why has the concept utterly faded from public view?
The answer is obvious: Bruce Rauner’s own sacrifice ($1 salary without benefits) was meaningless relative to his net worth (around $200 million). And it was painless relative to the financial pain he’s exacting of poor and middle class Illinoisans.
Had Rauner sacrificed, say, an amount equal to the $26 million he spent for his own election, he would have galvanized newsmedia, earned the respect of Illinoisans and sent the right message to the Griffins and the Zells and all the athletic, entertainment and business superstars who sit at the top of the heap of our money-driven society. They too must visible be seen paying their fair share of financial sacrifice.
But the Governor didn’t make this sacrifice, he lost his credibility with Illinoisans, and today there’s no indication that wealthy folks like him are feeling ANY trace of the financial pain that’s being exacted of poor and middle class Illinoisans, especially the handicapped and mentally ill, 1,200 laid off Chicago teachers and the venerable Illinois Historical Museum, to mention just a few.
This is a recipe for disaster. Illinois is on track to becoming ungovernable. So what to do? I see only one way: let the governor make the financial sacrifice he should have made last January.
What’s missing today is any sense whatsoever that we are all in this together. The only remedy to the polarization of rich and poor in Illinois is exemplary leadership, which can begin only with its Governor, who has been preoccupied with the question of breaking the power of unions. But irreducibly what really confronts him now is a moral question, one of citizenship and civic unity. Next to this, all the interminable feuds and squabbles we see on the news are a giant enormous sideshow.
Comment by Civic Sam Thursday, Oct 1, 15 @ 7:59 am
This property tax cut is contingent upon the State boosting the homestead exemption as Rahm requeste. Since Rauner opposes making property taxes less regressive, that higher exemption seems unlikely to happen, which is too bad.
Illinois already has one of the most regressive state and local tax systems in the nation. To introduce a little progressivity in property taxes would only make our regressive system slightly less so. While everyone should have “skin in the game,” those with less ability to pay should not bear a proportionately much higher burden than their affluent neighbors, the way they do now.
Comment by nona Thursday, Oct 1, 15 @ 8:34 am
== Is someone making the argument that those with properties under $250K now pay less as in property taxes as a percentage of income or net wealth? ==
No, but they are ignoring the current regressive nature of the property tax, and opposing a reduction in that regressivity. It’s remarkable that there is ready opposition to progressive tax rates, but justification of regressive rates.
== Tell us Chicago 20, how much does Ken Griffin pay in total taxes to the government. Not the %, the total amount he pays. ==
So proportions don’t matter, only the total $? That’s the mantra of the defender of the highly regressive status quo. Rates don’t matter so long as they are good and regressive.
== How about a wealth tax? That way everyone wold pay based upon what they can afford.==
FDR said that “Taxes should should be levied according to ability to pay. That is the only American principle.” This venerable principle goes back to 1776 and Adam Smith, the father of capitalism. Unfortunately, today all Republicans and many Democrats reject that principle, preferring the alternative of soaking the poor.
Comment by nona Thursday, Oct 1, 15 @ 8:49 am
FDR has left the room and he aint coming back. Welcome to 2015 and the situation we are now in.
But when wealthy people pay millions and millions in various taxes, you should thank them, not vilify them!
Comment by anon Thursday, Oct 1, 15 @ 10:10 am
OK, if I “sacrifice” crumbs of my net worth - millions in monthly taxes, perhaps - to help Illinois balance its budget, what kind of sacrifice am I making?
Credible shared sacrifice isn’t primarily a matter of the dollar amount I pay in taxes. It’s mainly a matter of the financial PAIN I feel.
To be real, to win the hearts and minds of taxpayers, to give Illinois the unity it needs in order to move itself forward, shared sacrifice is necessarily a matter of dollars paid relative to net worth.
I know this sounds idealistic, pie in the sky, socialistic, call it what you will. But consider the alternative, which is exactly where we are now: a modern day Titanic sinking fast. And the wealthy, as always, are the last to see the danger to us all.
Comment by Civic Sam Thursday, Oct 1, 15 @ 10:42 am
And Civic Sam, the wealthy continue to send in those big checks and pay those high real estate taxes and employ people who pay taxes and they buy things and pay taxes and on and on.
You should have stopped after “call it what you will.”
Comment by anon Thursday, Oct 1, 15 @ 2:24 pm
Anon, I don’t deny for a minute that the wealthy are sending in all those big checks and paying those high real estate taxes etc, etc. Sure, it goes on and on.
My point is that from everything I can tell the wealthy aren’t feeling anything remotely like the pain that lower and also middle class Illinoisans taxpayers are and will be feeling down the road. Instead, they (like everyone else) seems to be saying, hands off my money. Shared sacrifice, as a result, isn’t shared, which creates the dog-eat-dog world in which we’re raising our children these days. As an educator and a dad, and as someone concerned for the future of a state I love, this bothers me.
But I’m curious. You say I should stopped at “call it what you will”? Why so? Is Illinois actually in better shape than my Titanic comparison suggests?
Comment by Civic Sam Thursday, Oct 1, 15 @ 3:06 pm