Stop narrowing the tax base
Friday, Mar 15, 2019 - Posted by Rich Miller
* When you freeze assessments for one favored group of taxpayers, everybody else has to pick up the slack. So, if you want to help young homeowners, stop doing stuff like this…
The Illinois Senate is poised to take up a bill that would make it easier for some seniors to access a state program that limits property tax increases on their homes.
Under current law, people age 65 and older with incomes up to $65,000 can claim the Senior Citizens Assessment Freeze Homestead Exemption, which effectively freezes the taxable valuation of their homes so that their tax bills cannot go up simply because the market value of their home rises.
Senate Bill 1346, which cleared the Senate Revenue Committee on Wednesday, would expand that slightly, starting in the 2019 tax year, by allowing seniors to deduct from their income whatever money they spend on Medicare premiums. That would allow some people with incomes just above the $65,000 cap to claim the exemption.
Sen. Laura Ellman, a Naperville Democrat and lead sponsor of the bill, said it would benefit seniors who are “on the cusp” of the income limit, but she said she couldn’t estimate how many seniors it would benefit.
* Here’s what happened the last time the General Assembly got carried away with helping seniors on their property taxes…
When state lawmakers pushed through a trio of tax breaks in spring 2017, the idea was to ease some of the financial pain caused by Mayor Rahm Emanuel’s series of major property tax hikes on Chicago homeowners, especially senior citizens.
The changes, however, also had an unintended consequence: Thousands of homes in south suburbs such as Harvey and Park Forest fell off the tax rolls, meaning those homeowners no longer pay any property taxes at all, and an even greater number are paying less.
While that’s good news for many, it’s also resulted in tens of millions of dollars in property taxes being shifted onto remaining homeowners and businesses. They are now being hit with even higher bills in an impoverished, long-struggling, largely African-American region where an outsized property tax burden already made it difficult to attract the retail shops and industry needed to reverse economic woes made worse by the Great Recession.
- Anonymous - Friday, Mar 15, 19 @ 10:31 am:
So homeowners in Cook County, already assessed at about 2/3 of what those in other counties are assessed will win again.
- Anonymous - Friday, Mar 15, 19 @ 10:35 am:
The young are sacrificed for the old, again. What a country. Votes matter, I guess. I guess the social security age will be up to 80 before long. No retirement, no tax relief, no healthcare. Generational warfare.
- Sir Reel - Friday, Mar 15, 19 @ 10:35 am:
Easy for legislators to pass State laws that reduce revenues for local units of government. They look like heroes and local officials have to clean up the mess.
- Steve - Friday, Mar 15, 19 @ 10:37 am:
It’s hard to argue with Rich’s headline. This is the danger of the rent-seeking society.
- Honeybear - Friday, Mar 15, 19 @ 10:39 am:
Exactly,
So if we want to focus on cutting,
Cut the loopholes and breaks like this
Stop putting holes
in the revenue chest.
- Phenomynous - Friday, Mar 15, 19 @ 10:42 am:
Doesn’t a progressive income tax narrow the tax base?
- Rich Miller - Friday, Mar 15, 19 @ 10:44 am:
Phenomynous, a progressive income tax is based on ability to pay. Property taxes are not.
- Jocko - Friday, Mar 15, 19 @ 10:52 am:
==she couldn’t estimate how many seniors it would benefit==
Methinks this will benefit Laura come re-election time. It’s a shame those same seniors “on the cusp” will lose their meals-on-wheels due to Illinois having to make up for the budget shortfall.
- qualified someone nobody sent - Friday, Mar 15, 19 @ 10:54 am:
Property taxes are the MOST regressive form of taxation as they have no basis on the ability to pay. Exemptions of any kind, including religious, educational, etc. force the rest of the taxpayers to picjk up the slack via an increased tax rate. Evanston homeowners pay 50% more property tax than a Wilmette homeowners pays of the same valued house because the rate is 50% higher in Evanston (12% vs. 8%). Northwestern U. owns A LOT of property exempted from property taxes causing homeowners and businesses to PAY MORE. senior Freeze was created to protect Seniors from LARGE increases in valuation from affecting the dollar amount they pay. Giving it a MINIMUM valuation (2500 EAV)in the 2017 legislation created thousands of more taxpayers getting some additional relief already. this is overkill to placate a consistent voting block.
- A guy - Friday, Mar 15, 19 @ 11:02 am:
This one can’t be canned quickly enough. If you talk with most seniors these days, they’re far more worried about their kids than themselves. Especially in neighborhoods like the one this Senator represents.
- Just a guy... - Friday, Mar 15, 19 @ 11:05 am:
Property tax levies by local governments are based on the dollars to be received not the rate that is charged. Simply, the dollar of the levy is determined first, then the rate is determined based on the taxable values. Therefore, any reduction or exemption of property values does not reduce the levy. It only impacts the rate making it higher on those who are not exempted. Exemptions of value only shift the burden to other property owners. It is a false savings to the exempted person as their final tax rate goes higher. However, it is a good political tool that is over used by legislators.
- loopyhole? - Friday, Mar 15, 19 @ 11:07 am:
so it’s not ok to give a tax break to elderly, non-earning property-owners (they’re not renting) fighting to stay home and away from asset-eating long-term care; but it’s ok to give an income-tax break to the young, renting, income-earning but impoverished?
- DeseDemDose - Friday, Mar 15, 19 @ 11:07 am:
No more Tax exemptions for Religions and give seniors more exemptions.
- Romeo2 - Friday, Mar 15, 19 @ 11:15 am:
How about all a tax freeze for all property taxpayers? I’m on the cusp of $7k property taxes for a school district that is 60% free-&-reduced lunches. For the past four years, my property taxes have gone up $500 each year. Where’s my relief?
- Amalia - Friday, Mar 15, 19 @ 11:15 am:
many seniors don’t have children to care for them, or are not in touch with their children or near their children. they have bigger care needs that cost money. they are on fixed incomes. this is probably where the legislative idea comes from. like all ideas, cost out properly.
- Earnest - Friday, Mar 15, 19 @ 11:21 am:
>Under current law, people age 65 and older with incomes up to $65,000 can claim
So a retired senior would make $65,000 and pay no income taxes to the state plus the state reduces their local property taxes, while the younger person still working makes $65,000 pays state income taxes and ends up paying additional local property taxes because of the neighbor’s tax break? Not sure how that addresses any of the state’s critical issues in terms of budget, payment backlogs, funding of critical services, infrastructure, etc.
- Sue - Friday, Mar 15, 19 @ 11:24 am:
Rich- I am not in the senior age group but on this your out of your mind. Why not he’ll lower income seniors stay in their homes. The State has been so poorly managed that RE taxes are the second highest in the nation. Seniors making 65 K or less deserve a break. Not everyone in Illinois is drawing public pensions so if your income is limited to Social Security you need all the help you can get to afford your house. I guess you demonstrate a total lack of concern for non public retirees who are skimping by to survive in this economically unattractive state
- Rich Miller - Friday, Mar 15, 19 @ 11:35 am:
===Seniors making 65 K or less deserve a break===
At the expense of raising taxes on young homeowners in the same bracket?
Nope.
- Not It - Friday, Mar 15, 19 @ 11:38 am:
How about stop raising taxes so these tax exemptions aren’t always necessary?
- SAP - Friday, Mar 15, 19 @ 11:38 am:
If a retiree earning $65,000 a year needs a property tax break, think how badly a twenty-something year old parents with a kid or 2 and a family income of $65,000 need the break.
- township assessor - Friday, Mar 15, 19 @ 11:41 am:
The lead paragraph in the this post is spot on. Exemptions, tax appeals and TIFs all shift the tax burden onto those not receiving the benefit. All property tax bills in cook county are based on the budgets of school districts and local municipalities. Once the budgetary amounts are known, they are allotted to each parcel of property in a tax district.
- common_sense - Friday, Mar 15, 19 @ 11:43 am:
reduce spending
- Just Observing - Friday, Mar 15, 19 @ 11:50 am:
=== Easy for legislators to pass State laws that reduce revenues for local units of government. They look like heroes and local officials have to clean up the mess. ===
It would not reduce revenue for local governments — they would still get whatever they levied — the remaining amount would simply shift to other property owners.
- Bill - Friday, Mar 15, 19 @ 11:52 am:
$65,000.00 a year is equal to $31.00 an hour for a 40 hour week. It is equal to $5,400.00 a month. These people do not need a tax break. What part am I missing? FYI I’m retired and i own my own home and when I reach 65 I easily qualify for this unnecessary tax giveaway.
- Just Observing - Friday, Mar 15, 19 @ 11:53 am:
For all commenters suggesting this is a good idea, because seniors are struggling to pay their property taxes and are on fixed incomes… y’all are right… but lots of families of all age ranges are struggling to afford to pay their property taxes and are also on fixed incomes (meaning they can’t just click their heels together and come up with more money). Plus, let’s not forget that seniors already receive a property tax exemption and their retirement income is not subject to state income taxes.
- a drop in - Friday, Mar 15, 19 @ 12:10 pm:
Just index to inflation and leave it alone.
- Lester Holt’s Mustache - Friday, Mar 15, 19 @ 12:12 pm:
Dumb move from yet another pandering liberal. This makes zero sense as policy. What, is she trying to benefit her parents or a few specific donors or something? Seniors already get a ton of tax breaks, special discounts and we don’t even tax retirement incomein Illinois. This state already has a revenue problem, and Ellman wants to put even more of the burden on the non-elderly?
Oh, and news flash: the elderly mostly vote for republicans. So it probably won’t even help her politically. This sounds like a bill to help someone specific, instead of a well researched and thought-through policy proposal
- RNUG - Friday, Mar 15, 19 @ 12:18 pm:
== if your income is limited to Social Security you need all the help you can get to afford your house ==
The max SS benefit for 2019 is $34,332. Double that for a household and it is $68,664. Very few people get the max. So most the senior households living on just SS are already eligible for a freeze.
For 2019 the Medicare Part B premium is $135.50 per month or $1626 per year for most people (5% who exceed about $85K single / $170k married income pay a surcharge). Household of 2 would be $3252. So it effectively moves the cap to $68,252 for most households. Not a big change.
The only people I see this noticably benefiting are the roughly 1% of seniors who have to pay Part A premium of $437 a month or $5,244 plus the Part B premium listed above. That is likely a small business owner that never paid into SS.
Looking at it, this bill seems to be very narrowly targeted. Makes me wonder which of her supporters or friends benefits from it.
- JS Mill - Friday, Mar 15, 19 @ 12:19 pm:
=Easy for legislators to pass State laws that reduce revenues for local units of government. They look like heroes and local officials have to clean up the mess.=
And this is a big reason property taxes have risen and are high. The state has not only backed out of their funding responsibility, they provide exemptions that impact local governments other funding stream all for the sake of votes.
=Property taxes are the MOST regressive form of taxation as they have no basis on the ability to pay.=
So people buy houses but not based on their ability to pay?
=Not everyone in Illinois is drawing public pensions so if your income is limited to Social Security you need all the help you can get to afford your house. I guess you demonstrate a total lack of concern for non public retirees who are skimping by to survive in this economically unattractive state=
You need help.
- RNUG - Friday, Mar 15, 19 @ 12:20 pm:
- Lester Holt’s Mustache -, you got to the same point while I was typing all the math.
- Lester Holt’s Mustache - Friday, Mar 15, 19 @ 12:37 pm:
==- Lester Holt’s Mustache -, you got to the same point while I was typing all the math.==
Lol, sorry about that RNUG. My post was a bit hyperbolic, but I don’t see this bill helping any substantial number of seniors. I usually hate to question anyone’s motives, but it seems called for here
- A guy - Friday, Mar 15, 19 @ 12:55 pm:
==The max SS benefit for 2019 is $34,332. Double that for a household and it is $68,664==
RNUG, and if you’re receiving the max, it’s because you paid the max on very good salaries. This category of people likely were in a position to, and smart enough to, put a buck or two in their IRAs or other investment vehicles along the way. Just guessing, but pretty sure.
- Anonymous - Friday, Mar 15, 19 @ 12:58 pm:
The pensions are not being cut. That darn constitution.
- sulla - Friday, Mar 15, 19 @ 1:05 pm:
“Generational warfare”
You are correct.
58% of voters aged 30-44 voted in ‘16. 18-29 year olds voted at a rate of about 45%.
The young will continue to get ripped off by the old until the former starts showing up at the polls in force.
- Generic Drone - Friday, Mar 15, 19 @ 1:11 pm:
@Sue. ” not everyone gets a public pension”. Just can’t give it a rest, can you. Your hatred of public employees smells of jealousy
- qualified someone nobody sent - Friday, Mar 15, 19 @ 1:13 pm:
Taxpayers over 65 probably bought their home MANY years ago; - not based on their ability to pay for it NOW- State of Illinois doesn’t pay its share for K-12 education and therefore REGRESSIVE property taxes to pay for K-12 education. 65 - 70% of Cook County property tax bills. So yes, THE MOST REGRESSIVE form of taxation. Choices available for extremely high sales tax. Don’t buy anything.
- BenFolds5 - Friday, Mar 15, 19 @ 1:28 pm:
JS the affordability question in some of the collar counties with tax increases aren’t as easy as you want them to be. Plainfield is a great example. There are 2 or 3 different counties attached along with districts. It’s not uncommon for younger couples to have to downsize the 250k home when the taxes are at 13k. I only know that this is why it’s going to be such a fight. We keep raising with no cuts for the majority.
- Responsa - Friday, Mar 15, 19 @ 1:32 pm:
I have come to the point that in order to grow the tax base and relieve individuals there need to be some changes made to the property exemptions for religious organizations. As mentioned above, Evanston is often cited as the poster child for the “church on every corner” impact on property taxes but it is far from alone.
- RNUG - Friday, Mar 15, 19 @ 1:34 pm:
== and if you’re receiving the max ==
I’m not. Quite a ways from it.
- Sue - Friday, Mar 15, 19 @ 2:02 pm:
Generic- oh I guess I forgot that the public pension issue has nothing to do with our State’s fiscal crisis. Silly me
- illinifan - Friday, Mar 15, 19 @ 2:37 pm:
Instead of passing this type of legislation to benefit one group over another, this makes the case once again for comprehensive tax reform in Illinois. Not only does the state income tax need to be changed, so does property and how education is funded in the state.
- TinyDancer(FKASue) - Friday, Mar 15, 19 @ 2:56 pm:
How about pass a graduated income tax so the state can afford to do what it’s supposed to do……fund the schools.
That’s the whole problem - property taxes are jacked up because the state can’t afford to pay its share.
And…Nothing’s fair, but if you want to talk about fairness - seniors have no children in school so maybe the school-funding portion of their property tax bill should be eliminated.
- Just another Anon - Friday, Mar 15, 19 @ 2:59 pm:
@Sulla TIL I’m now considered “the Old” at 30…. Does this entitle me to use the phrase “back in my day”?
- NoGifts - Friday, Mar 15, 19 @ 3:03 pm:
Seniors have no children in school, but did they go to school? People with no children also don’t have children in school. They also presumably went to school.
- Sue - Friday, Mar 15, 19 @ 3:12 pm:
All of you saying the State needs a progressive tax structure to allow for enhanced revenues to pay for education and other services are the same folks supporting the tax cuts for the 97 percent. Whats fair about only 3 percent being asked to pay for the turn around?
- Lester Holt’s Mustache - Friday, Mar 15, 19 @ 3:12 pm:
==Generic- oh I guess I forgot that the public pension issue has nothing to do with our State’s fiscal crisis. Silly me==
C’mon Sue, even you have to admit that you have an exceedingly consistent tendency to comment on every single Capfax post about state finances by linking said issue to public employee pensions, and that most (if not all) of your suggestions end with some implied or outright variation of “get rid of the pensions” - which you and I both know is not an option.
I get it, I wish I was getting a guaranteed state pension too (I did work for the state, but not long enough to get vested in the retirement system). Still, the way you do it - on every single topic - combining that linkage with a “woe is me, the poor brave citizen struggling under the burden of single-handedly supporting public pensions” comments come off as a little unseemly and a lot unnecessarily hateful. You can’t really be that surprised when Generic or someone else attributes this repetition to jealousy, can you?
- TinyDancer(FKASue) - Friday, Mar 15, 19 @ 3:27 pm:
=Whats fair about only 3 percent being asked to pay for the turn around?=
Um…have you heard about this thing called income inequality?
What’s fair about the 3% having 90% of the wealth?
- Anyone Remember - Friday, Mar 15, 19 @ 4:11 pm:
Illinois, the stated state motto is “State Sovereignty National Union” the workaday motto is “Waivers ‘R’ Us” …
- anon2 - Friday, Mar 15, 19 @ 4:52 pm:
===What’s fair about only 3 percent being asked to pay for the turn around?===
Illinois has one of the most regressive state and local tax systems in the nation. Wealthy residents pay an effective tax rate just a fraction of that paid by the lowest fifth of income earners. A graduated income tax will reduce, not eliminate, that gross regressivity.