* I didn’t go to Gov. Pritzker’s event earlier today, but I watched online and then listened to the CMS audio and there was a hole in both recordings at the beginning of Pritzker’s response to a reporter’s question about the proposed hike in Chicago’s real estate transfer tax on properties selling for a million dollars or more. So, I checked in with the governor’s office to clarify what he said and then reconstructed the first part of the first sentence…
I’m not necessarily against a change in the real estate transfer tax. We need to see what the results are. There’s still some debate going on, as you know, about what it might look like. I think we have to be careful. Property taxes are too high to begin with in general. We have to be careful about, obviously, I believe more in a graduated system than I do in a flat tax system so that wealthier people carry more of the load than people who are not wealthy. But I’m interested to see what they come up with
Supporters claim the tax would generate $160 million a year for homeless programs, but it appears like it’s about to be changed.
* WTTW…
Department of Housing Commissioner Marisa Novara, who will step down at the end of the month, said city officials would recommend the proposal be altered to apply to just to the amount of the sale over $1 million, in an effort to ensure it withstands a legal challenge and lowers the incentive for sellers to “game the system.”
Imposing a marginal tax, rather than a flat tax, would make the tax fairer, and ease the tax burden on two- to six-unit properties, both residential and commercial, Novara said, adding that developments subsidized to be affordable could also be exempted.
For example, a property sold for $1.2 million now pays $9,000 in real estate transfer tax, Novara said. The proposal would hike that to $12,800, an effective increase of about 42% on the $200,000 of the sale price above $1 million, she added. […]
Just 4.3% of all property sales in Chicago total more than $1 million, which requires annual incomes of between $200,000 and $240,000, advocates said. Just 6% of Chicagoans earn that much money.
If they’re gonna do it, a marginal rate is definitely the way to go. And small multi-unit relief is another sign that more experienced hands are now working on this. But those changes will mean less revenue.
* Tribune…
The only ways to change the rate, however, are through the Illinois General Assembly, which does not reconvene until the late fall veto session, or a citywide referendum. While aldermen Thursday announced they will opt for the latter, Johnson’s transition committee recently recommended going through the state legislature.
The city council always wants the General Assembly to do its dirty work on taxes. They should really consider holding a referendum.
- Just Me 2 - Friday, Jul 28, 23 @ 12:24 pm:
The advocates have done a good job labeling this a tax on mansions, but it is really a tax on all properties. So it is a tax on housing in order to fund more housing?
Related - it seems every week there is a new spending priority in Chicago. Transit, snow shoveling sidewalks, housing, migrants. Money ain’t free, people!
- Sue - Friday, Jul 28, 23 @ 12:58 pm:
Anyone in favor of this should investigate what occurred in LA. After their increased mansion tax went into effect the market for those homes fell to zero and the tax collections are nil
- Excitable Boy - Friday, Jul 28, 23 @ 1:03 pm:
- And small multi-unit relief is another sign that more experienced hands are now working on this. -
I’m not one to let perfection be the enemy of good, but challenging the way things are always done doesn’t always imply naivity, and experience is wasted if you aren’t willing to evolve.
- SammyG - Friday, Jul 28, 23 @ 1:08 pm:
There are no more houses in Los Angeles for sale over $1 million dollars? That’s news to me!
- supplied_demand - Friday, Jul 28, 23 @ 1:12 pm:
==After their increased mansion tax went into effect the market for those homes fell to zero and the tax collections are nil ==
Where did you hear this? Why did you blindly believe it? The law went into effect in April. On Redfin, I count about 70 homes that have sold for over $5 million in the past 3 months. There was some pulling forward of demand to beat the tax, but homes will be, AND ARE being sold for over $5 million where the tax kicks in and even $10 million where the tax stiffens. Other places, like New York, also have these laws and still see a robust high-end market.
https://www.redfin.com/city/11203/CA/Los-Angeles/filter/min-price=5M,max-price=100M,
include=sold-3mo,viewport=34.23246:33.88033:-118.24079:-118.59304?utm_source=
google&utm_medium=ppc&utm_term=kwd-332794655445&utm_content
=452206809555&utm_campaign=1022906&gclid=CjwKCAjwzo2mBhAUEiwAf
7wjkl1iJTOMYnCbwE-5U2ZuoVItAaiR8I0wV7SGqxq4-cwC4wIRpkSyhhoCve8QAvD_BwE
- Oswego Willy - Friday, Jul 28, 23 @ 1:17 pm:
===should investigate===
* You* could just have a cite that you want to make your point, - Sue -
- P. - Friday, Jul 28, 23 @ 1:22 pm:
Yeah there are only 3,700 homes in LA listed at $1m plus, almost as many Ls as you have posted here over the years, Sue.
- Montrose - Friday, Jul 28, 23 @ 1:22 pm:
* After their increased mansion tax went into effect the market for those homes fell to zero and the tax collections are nil*
Since the new tax went into effect in April, not a single property over $5 million has sold in LA? Not one? To Oswego’s point, that’s a pretty bold stat to share without any data to back it up.
- Change Agent - Friday, Jul 28, 23 @ 1:26 pm:
“The city council always wants the General Assembly to do its dirty work on taxes. They should really consider holding a referendum.” Huh?
As noted in the sentence directly before this, the alders said that they plan to go the referendum route. The transition committee may have recommended state legislation, but the Mayor’s Office has made it clear (weirdly) that the transition committee doesn’t speak for the Mayor.
- Cool Papa Bell - Friday, Jul 28, 23 @ 1:50 pm:
@Sue -
=From May 1 to May 30, the City of Los Angeles recorded 10 sales with prices above $5 million. About 17 homes in that price range went under contract in Los Angeles in the month, according to research by Amalfi Estates agency in Pacific Palisades. =
Nil?
And I’m sure things like uncertain interest rates, the economy, strikes in Hollywood and whatever else impacts the few dozen people every month that can afford such property have zero impact.
- D0 - Friday, Jul 28, 23 @ 2:02 pm:
So of the 4.3% of properties that are over $1 million, how many are single family homes? This isn’t really a mansion tax, it’s a business and landlord tax. Many multigenerational families purchase duplexes and small apartment buildings, particularly immigrant families. The money has to come from somewhere so I’m not fundamentally opposed but let’s be realistic about who is paying this: mom and pop landlords, tenants in low-cost units, small businesses. The big players will get it all back in subsidies and tax breaks anyhow. A marginal rate is a must and perhaps a tired system for multiunit properties.