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About that property tax proposal

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Illinois

* Mark Brown discusses Gov. Pat Quinn’s proposed $500 property tax refund…

The governor proposed the property tax refund Wednesday as the sweetener to help Illinoisans swallow his decision to make permanent the “temporary” income tax hike he signed into law in 2011.

If the Legislature goes along, Quinn plans to start sending out the $500 checks this summer so that voters might feel a little more kindly toward him when they step into the voting booth this November. […]

The average credit currently is $247, says the Quinn administration, which equates to a net gain to a taxpayer of $253 after trading off the credit for the refund. Your net gain will be more or less than that, depending on how much you pay in property taxes.

Quinn didn’t really make that clear, just as he failed to mention altogether that for anyone who currently pays more than $10,000 a year in property taxes, his plan will result in a net tax increase.

The governor’s office says that will effect fewer than 10 percent of Illinois homeowners, which sounds about right, but I’m pretty sure nearly all of them live in the high-tax Chicago metro area.

* The net effect of this is that the vast majority will get a small property tax break (which isn’t really a property tax break, it’s an income tax refund loosely based on property taxes), while the upper middle class and the wealthy will see a smaller break.

My own property taxes are above $10K in Springfield. The proposed plan means I’ll lose about $125. Mark Brown also admitted that the proposal would cost him a few dollars, but wrote that he doesn’t “begrudge the state the extra hundred bucks or so a year.”

* Bruce Rauner lowered his 2012 Illinois taxes by $3,007 with the state’s property tax credit. So, if this new $500 credit passes, Rauner will have to pay about $2,500 more next time around.

By the way, Rauner paid about $2.6 million in state taxes for 2012, but he made $3.5 million in estimated payments, so he got a state tax refund check worth about $880,000.

* Also, Speaker Madigan claimed yesterday that the tax refund was his own idea…

Madigan said during a public television interview, adding, “My demand as part of this program is relief for homeowners on their real estate taxes.”

* The Republicans were not amused…

[Sen. Matt Murphy] said Quinn’s proposal to roughly double the current amount of overall property tax relief is equivalent to a $600 million “kickback” that would raise the overall amount of state relief for homeowners to more than $1.2 billion a year.

I think it’s actually $700 million in net new spending for a total of $1.3 billion, but whatever the case, it’s a lot of new money. More cuts in other areas will have to be made to pay for this, and that’s always one of the biggest problems with ideas like these.

posted by Rich Miller
Thursday, Mar 27, 14 @ 8:32 am

Comments

The other thing is this sort of penalizes higher growth areas (it would result in me getting a bit more) but we have a high property tax rate in part because we have built a lot of new schools in the past 14 years in the Oswego SD so a good chunk of my property tax bill goes to dealing with that debt.

So I am going to have neighbors south of me getting less back in part due to that.

Also besides the obvious political reason, why send a check when it should be a tax credit.

Comment by OneMan Thursday, Mar 27, 14 @ 8:41 am
–[Sen. Matt Murphy] said Quinn’s proposal to roughly double the current amount of overall property tax relief is equivalent to a $600 million “kickback”–

From Webster’s:

–kickback: an amount of money that is given to someone in return for providing help in a secret and dishonest business deal.–

Don’t really see a kickback here, but I read all the time that Murphy is the Senate GOPs big brain on budget and tax matters, so it must be true.

Hopefully, he’s helping Rauner develop all those comprehensive tax plans and restructuring of state government proposals that were all eagerly awaiting.

If he’s not too busy making ISU and SIU Big Ten schools.

Comment by wordslinger Thursday, Mar 27, 14 @ 8:42 am
===Murphy is the Senate GOPs big brain on budget and tax matters===

Big, compared to what LOL.

Comment by PublicServant Thursday, Mar 27, 14 @ 8:47 am
Does this mean that people who own multiple properties will receive multiple checks? And this does nothing for people who rent.

Comment by Anon Thursday, Mar 27, 14 @ 8:49 am
But what if those schools football teams unionize? Would NIU be another option in that case….oh the imaginary horrors Sen. Murphy has created for himself.

Comment by Jorge Thursday, Mar 27, 14 @ 8:49 am
Rauner should campaign that he is giving the state interest free loans. What has Pat Quinn done?

Comment by Wumpus Thursday, Mar 27, 14 @ 8:49 am
I read Brown’s column and am too awaiting to see what Rauner’s plans are to properly fund education, reform government and create job growth while allowing the income tax increase to expire.

I also admire Brown’s generosity and willingness to pay a little more in property taxes to help the kids. I hope that some of this generosity is exhibited by our friends at IPI and the Civic Committee.

Comment by Grandson of Man Thursday, Mar 27, 14 @ 8:50 am
[genuine question]
Why is it not both good policy AND good politics to use that extra $700 million to fund education instead? Isn’t the point of keeping the current income tax rates to ensure adequate funding for essential state programs?

I get the cynical explanation for why Quinn would have an interest in mailing out checks to every voter in an election year.

But why wouldn’t a heavily touted education funding push be a politically savvy move as well? Gin up the teacher vote a bit, the suburbuan-mom-concerned-with-school-quality vote, some the progressive vote he probably lost with pension reform.

I’m curious what you all think.

Comment by strawman Thursday, Mar 27, 14 @ 8:56 am
Rauner didn’t get the $880,000 in a refund check, he told the State to keep the money and use it against his 2013 state income taxes.

Comment by Anon Thursday, Mar 27, 14 @ 8:59 am
– Gin up the teacher vote a bit, the suburbuan-mom-concerned-with-school-quality vote–

For a lot of suburban school districts, they don’t necessarily see much state money in the classroom — certainly not like Chicago and Downstate.

State money pays the suburban school pensions, though, which are a heavy lift.

Comment by wordslinger Thursday, Mar 27, 14 @ 9:03 am
It’s pretty genius in an underhanded way.

The state’s finances are a mess so we must cut our obligations to retired public employees. But, sure, the state can afford to spend $700 million additional dollars on a tax refund. I’m sure the election year thing is a total coincidence.

It’s a good move. Hurt a small number of vulnerable citizens (public employees/retirees) and give a tax break to a much larger collection of voters.

Comment by Johnny Q. Suburban Thursday, Mar 27, 14 @ 9:04 am
=== Does this mean that people who own multiple properties will receive multiple checks? And this does nothing for people who rent. ===

My assumption is that the maximum amount of the credit is $500 regardless of how many properties you own. But you are right that it does nothing for people who rent.

Comment by March Madness Thursday, Mar 27, 14 @ 9:07 am
===And this does nothing for people who rent.===

But what about trickle-down? I thought that was what you Repubs believe in?

Comment by PublicServant Thursday, Mar 27, 14 @ 9:11 am
A lot easier to remove a tax credit than it is to change the income tax rate.

Comment by Jack Handy Thursday, Mar 27, 14 @ 9:13 am
Why continue to make the hard to understand system of taxation even harder to understand?

Comment by Overtaxed Thursday, Mar 27, 14 @ 9:15 am
I’m the one who made the comment and I can assure you I’m no Repub.

Comment by Anon Thursday, Mar 27, 14 @ 9:21 am
How about we figure out what the Republicans are for and start there. If they aren’t even for a tax break I have no idea what they are for.

Comment by Demoralized Thursday, Mar 27, 14 @ 9:25 am
It is curious that Matt Murphy has chosen to describe a proposal to return tax dollars to the taxpayers as a “kick back”

Comment by Bill White Thursday, Mar 27, 14 @ 9:25 am
if you are a struggling 30- or 20-something single or couple, just getting started, you are probably renting. your rent pays property taxes, but you get nothing. but rauner gets his break. so much for populist pat looking out for the average guy.

Comment by langhorne Thursday, Mar 27, 14 @ 9:44 am
When can I get a final number on how much money the schools need? It’s always about the schools.

Comment by No Buddies Thursday, Mar 27, 14 @ 9:59 am
property owners vote,not so much for most renters.

Comment by Anonymous Thursday, Mar 27, 14 @ 10:02 am
So, instead of a $50 million deal for an anti-crime program, it’s $700 million for property owners. I get it.

Comment by dupage dan Thursday, Mar 27, 14 @ 10:04 am
How would we refer to that, anyway? Stupid election year politics?

Comment by dupage dan Thursday, Mar 27, 14 @ 10:05 am
So, to be fair can we now demand that Quinn and anyone that supports his plan tell us what exact areas will be cut to come up with the billion dollars to fund the property tax refund and doubling of the state’s earned income tax credit? If we are demanding specifics from one side we need to demand those same specifics from the other side (especially when they have the control necessary to actually enact their plans).

Comment by Worth It Thursday, Mar 27, 14 @ 10:07 am
Renters, arguably, will benefit too by way of decreased rents. Yes, it’s hard to quantify, and yes, consciously, landlords may not immediately, directly pass on the savings, but the laws of economics dictate that renters, by and large, will benefit to some degree.

Comment by Just Observing Thursday, Mar 27, 14 @ 10:11 am
JO,only if you leave out many other factors that go into “rent:” Supply, demand, location, etc.

Comment by wordslinger Thursday, Mar 27, 14 @ 10:17 am
@Langhorne:

Is your name derived from the movie “The Man Who Shot Liberty Valance” by any chance?

Comment by Upon Further Review Thursday, Mar 27, 14 @ 10:19 am
Brown’s column mentions this as the method for the $500 property tax rebate/credit/refund:

==While you’re busy spending your $500, however, you ought to keep in mind that the refund replaces the 5 percent property tax credit that Illinois homeowners now receive on their income tax return.==

While I appreciate the detailed analysis, how do we know that this is the mechanism for the $500 rebate/credit/refund? Did Quinn’s speech provide this level of detail (and I just missed it), or is there a draft bill circulating?

Comment by Agricola Thursday, Mar 27, 14 @ 10:21 am
Call this mechanism anything you want; refund, rebate, kickback, evening up, etc. What it is, is a gimmick. We’ll put more change in your pocket while we attack the paper money in your wallet. It’s not a fundamental change in taxation, it’s a tit for tat, hopefully it feels good plan. I don’t think it sells like frisbees or hula hoops in voterland.

Comment by A guy... Thursday, Mar 27, 14 @ 10:29 am
Remember the outrage from Murphy and the Republicans when President Bush mailed out tax rebate checks to the whole country?

Yeah, of course you don’t.

Of all of the hypocrisies, faux outrage is the least tolerable.

Comment by Yellow Dog Democrat Thursday, Mar 27, 14 @ 10:36 am
Awesome to hear Republicans standing up for low income renters.

See my post regarding faux outrage above.

Reality Check: Quinn’s budget expands the Earned Income Tax Credit, so low income renters will get a break as well.

Stick that in your pipe and smoke it.

Comment by Yellow Dog Democrat Thursday, Mar 27, 14 @ 10:39 am
=== - Upon Further Review - Thursday, Mar 27, 14 @ 10:19 am:

@Langhorne:

Is your name derived from the movie “The Man Who Shot Liberty Valance” by any chance? ===

My bet is Langhorne Bond, a DOT Secretary who irritated some Solons. An end of session ritual of the late Sen. John Knuppel was to go to the 3rd floor railing and yell Bond’s name in the Rotunda.

Comment by Norseman Thursday, Mar 27, 14 @ 10:40 am
Hey Pat -
I think it is going to cost you more in “grants” and “refunds” this year, than in 2010 to buy another election.

Comment by VanillaMan Thursday, Mar 27, 14 @ 10:42 am
Maybe the renters’ rent will not go up as much. It is also unfair that people without children don’t get to take child deductions

Comment by Wumpus Thursday, Mar 27, 14 @ 10:42 am
===to be fair can we now demand that Quinn and anyone that supports his plan tell us what exact areas will be cut to come up ===

Go look at the budget book.

Comment by Rich Miller Thursday, Mar 27, 14 @ 11:08 am
Edgar did something similar in 1993 where he gave the money back to municipalities, and Edgar trusted them to lower property taxes(lower property taxes did not happen). (Edgar was an honest politician, he assumed local politicians were honest). I don’t blame Edgar, but his trust in local government was misplaced. Almost every local government WILL spend every dime they get, and they did.
At least Quinn will get the $500 into the hand of the actual taxpayer.

Comment by DuPage Thursday, Mar 27, 14 @ 11:09 am
YDD- Good point on the faux-outrage. Worst part of modern politics. It makes my blood boil whenever I hear PQ spout his concern for low/middle income folks right after he decided to cut benefits for a whole chunk of low/middle income retirees.

Comment by Johnny Q. Suburban Thursday, Mar 27, 14 @ 11:12 am
It’s interesting. The GOP-controlled legislature and Governor Walker recently approved a $400 million property tax reduction in Wisconsin. The Dems there were all over it like a wet shirt, claiming it was an election year ploy to curry favor with voters. I guess it is true that where you stand on an issue depends on where you sit.

Comment by GA Watcher Thursday, Mar 27, 14 @ 11:14 am
“[Edgar] assumed local politicians were honest”

Come on. Edgar was a lot of things, but he wasn’t a dope.

– MrJM

Comment by MrJM Thursday, Mar 27, 14 @ 11:15 am
Having successfully petitioned to have property taxes lowered (more than $500) on my home and office building due to the result of a bad economy, I was stunned to find that they automatically went back up the following year. This happened during the same bad economy in which actual property values had remained stagnant. So, call me cynical.

Comment by Keyser Soze Thursday, Mar 27, 14 @ 12:15 pm
re the wisconsin property tax rebate, that state’s finances are in solid shape, not like those in Illinois. Quinn’s rebate is giving with one hand and taking with another.

Comment by jim Thursday, Mar 27, 14 @ 12:21 pm
To sum up the GOP position, property tax relief in Wisconsin is good. The Bush rebate checks were good. But the Quinn checks for property taxes are bad. Thanks YDD for pointing it out.

Comment by Anon Thursday, Mar 27, 14 @ 12:34 pm
Johnny Q. Suburban -

I think what you are accusing Quinn of is faux compassion, not faux outrage….there is a difference.

Your point is well taken, nevertheless.

If it is any comfort, attorneys for public employees believe their case is a slam dunk. For your sake, I hope they are right.

Comment by Yellow Dog Democrat Thursday, Mar 27, 14 @ 12:37 pm
The Speaker is channelling his inner Mary Poppins. $500 is a spoonful of sugar to help the medicine go down.

Comment by 47th Ward Thursday, Mar 27, 14 @ 12:45 pm
@MrJM11:15
Edgar was a straight arrow. I think he was a little more inclined to give them the benefit of the doubt up to that point. After that, not so much.

Comment by DuPage Thursday, Mar 27, 14 @ 1:38 pm
- Anonymous - Thursday, Mar 27, 14 @ 10:02 am:

property owners vote,not so much for most renters.

As a former renter I can assure you I never missed a General Election.

- Just Observing - Thursday, Mar 27, 14 @ 10:11 am:

Renters, arguably, will benefit too by way of decreased rents. Yes, it’s hard to quantify, and yes, consciously, landlords may not immediately, directly pass on the savings, but the laws of economics dictate that renters, by and large, will benefit to some degree.

Yeah, and pigs are gonna fly.

Comment by Anon Thursday, Mar 27, 14 @ 2:39 pm
Republicans opposing a tax cut proposal for people who pay less than $10K in property taxes because it will cost too much?

==re the wisconsin property tax rebate, that state’s finances are in solid shape, not like those in Illinois. Quinn’s rebate is giving with one hand and taking with another.==

Wisconsin has a structural deficit of nearly a billion dollars. I’d hardly call that “solid shape.”

Comment by Precinct Captain Thursday, Mar 27, 14 @ 4:07 pm
Jim, a little secret for you. Fox News misled you.
http://mediamatters.org/research/2014/01/27/what-fox-wont-tell-you-about-scott-walkers-econ/197776

Comment by Anonymous Thursday, Mar 27, 14 @ 5:44 pm
For 90% of us, sounds like, that $500 in our pocket from Pat Quinn as a respectful break for paying already high PROPerty taxes–the REAL Tax Culprit out there–is quite frankly, WELcome financial relief which goes toward paying down/off necessary bills.

The other 10% Brown references are obviously, or at least quite likely, much WEALTHier folks, as a rule, who don’t quite GET that–that a $500 Tax REbate is a BIG DEAL which REALLY HELPS us pay off debt(!)–as well as the rest of us 90% do, and they very likely may well vote for the HYperdrive-Wealthy opponent ANYway, since that small minority is closer to HIS “.01%” Elite Category of Rich Runners, so their objections don’t much MATTer to the rest of us Gentry folk–they’re also too busy spending all of that excess dough in their pockets anyway…!

Quinn has a GREAT idea here for the VAST MAJORity of Illinois Homeowners, and I genuinely hope the Democratic-Majority Legislature passes it, and that the Extra, and MUCH-Appreciated, $500 $mackers’ll be in my/our Pockets by Labor Day or so (which, interestingly, would be just over a mere 2 Months before the Governor DOES ask the People to help HIM stay in Springfield one last time with that smile of cash-in-hand on their Faces, once he has helped THEM/OUR Wallets get just a LITTle fatter)…!

Comment by Just The Way It Is One Thursday, Mar 27, 14 @ 10:25 pm
Illinois has a pot of gold there for the taking if they would just pass recreational marijuana as law. Why wait,,,it going to happen anyway,,,why wait, when we need the money so badly now.

Comment by Gare Friday, Mar 28, 14 @ 12:20 am