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* Actually, it’s not even a bill yet and it probably won’t ever be one because I don’t think anybody in the General Assembly is this politically suicidal, but one never knows I suppose…
Illinois homeowners, who already pay some of the nation’s highest property taxes, should pay about 40 percent more for the next decade to wipe out the state’s crippling pension debt, according to a trio of economists at the Federal Reserve Bank of Chicago.
The economists argue that paying off the state’s $129.1 billion in unfunded pension obligations cannot be done with revenue from new taxes such as a tax on marijuana sales or on financial transactions.
“In our view, Illinois’ best option is to impose a statewide residential property tax,” they wrote, in part because it would be fair: “Illinois residents who have benefited most from the past services of governmental employees are more likely to be homeowners, so it seems reasonable that they should pay a larger share of the costs.”
They are proposing a statewide tax of 1 percent of a home’s value. Under their plan, the tax bill on a $500,000 house would go from about $11,600 to $16,600, an increase of $5,000, paid each year for 10 years.
The economists—Thomas Haasl, Rick Mattoon and Thomas Walstrum—calculated that a property tax equal to 1 percent of a home’s value could plug the state’s pension gap in 10 years.
As some commenters have noted, this is a 30-year tax hike proposal, not ten.
* More bills…
* Campaign-finance reform bill stalls during big-money Illinois governor’s race
* Bill would help Swansea school damaged by mine subsidence
* Bush urges Wisconsin to reconsider Foxconn deal, asks Illinois agencies to protect against loss of water, flooding: SR 1600, which passed out of the Senate Environment Committee today, also asks Illinois agencies to take whatever actions possible to protect against the loss of water, potential flooding and other ecological impacts that might result from the Foxconn deal.
* Government union lobbying turns legislation against students: SB 2838 was meant to aid school districts – and students – by providing a means for schools to recruit substitute teachers. But government union lobbying transformed it into a pro-union, pro-strike bill that hinders educational opportunities for students during teacher strikes.
* Retired military leaders call for more child care, education funding
posted by Rich Miller
Monday, May 14, 18 @ 2:47 pm
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We hear Glenn Beck did a whole bit on this report Monday morning. He made it sound like the tax had already been increased.
Guessin’ GovJunk out in the a.m. with repeal message.
Comment by Annonin' Monday, May 14, 18 @ 2:52 pm
IF all the economists were laid end to end, they would point in different directions.
Comment by Smitty Irving Monday, May 14, 18 @ 2:53 pm
Sour grapes much Sen. Bush?
You know there will be workers from Illinois working there?
Comment by plutocrat03 Monday, May 14, 18 @ 2:56 pm
they are proposing a 30 year tax increase not 10
“In our view, Illinois’s best option is to impose a statewide residential property tax that expires when its unfunded pension liability is paid off. In our baseline scenario, we estimate that the tax rate required to pay off the pension debt over 30 years would be about 1%. This means that homeowners with homes worth $250,000 would pay an additional $2,500 per year in property taxes, those with homes worth $500,000 would pay an additional $5,000, and those with homes worth $1 million would pay an additional $10,000.”
http://midwest.chicagofedblogs.org/?p=3096
Comment by Anonymous Monday, May 14, 18 @ 3:01 pm
“Illinois residents who have benefited most from the past services of governmental employees are more likely to be homeowners,”.
What should taxpayers expect from some educated Chicago bankers? I’d say the “Illinois residents who have benefited most from the past services of governmental employees”, are those who receive an assistance check from the state of Illinois. How about Illinois stop taxing workers & property owners and start taxing people for usage, that way everyone pays their share.
Comment by Nobodys Accountable Monday, May 14, 18 @ 3:03 pm
If many of the CME and CBOE types live in Illinois and own large homes, why wouldn’t they rather pay 0.02-0.1% on a transaction instead of $10,000-30,000/year more in property taxes? A 0.1% tax on $10,000,000 in trades is $10,000.
Comment by Lefty Lefty Monday, May 14, 18 @ 3:05 pm
Apparently the author from Crain’s didn’t read the article very well. The increase of 1% (40% overall increase) was for 30 YEARS, not 10.
Comment by Smalls Monday, May 14, 18 @ 3:07 pm
=Illinois residents who have benefited most from the past services of governmental employees are more likely to be homeowners=
Evidence?
I know that no one I represented when I worked for the state was a homeowner (they were all incarcerated, so there’s that). How many DCFS clients are homeowners? What percentage of car owners and drivers license holders are also homeowners? How many people who visit the state parks and historic sites are homeowners?
I could go on . . .
Comment by JoanP Monday, May 14, 18 @ 3:07 pm
This is a really silly proposal that will never happen.
Comment by Ron Monday, May 14, 18 @ 3:08 pm
Perhaps these three spread sheet jockeys should run for State Rep or Senator and make that proposal their #1 talking point. The new Fed tax laws cap prop tax write off at $10,000 so this idea should just fly though to a vote.
Comment by zatoichi Monday, May 14, 18 @ 3:09 pm
Why the hurry for 10 years?
Comment by Da Big Bad Wolf Monday, May 14, 18 @ 3:10 pm
Cue the next David McSweeney resolution….
Comment by Anonymous Monday, May 14, 18 @ 3:10 pm
“Illinois residents who have benefited most from the past services of governmental employees are more likely to be homeowners…”
Change “homeowners” to “retirees” and you might have a better argument for a different type of tax.
Comment by City Zen Monday, May 14, 18 @ 3:13 pm
And to Rich’s comment - “and it probably won’t ever be one because I don’t think anybody in the General Assembly is this politically suicidal.” That is the problem in Illinois. For me, this just puts into perspective how big of a problem this really is, and nobody really wants to be “suicidal” in coming up with a solution. Considering Rich thinks it is suicidal, that means that paying for the pensions in the future will be suicidal. I get it, there are a lot of ways to pay for things. But the gist of the article is to get everyone to understand how massive this is, and that something needs to be done about it.
I think the reality is that a solution might include most or all of the following: this type of property tax at the state level, although at a smaller amount, maybe 0.25%; increasing the sales tax by 1%; increasing the income tax by 1%; expanding income tax to retirement income, but exempting the first $30,000 of retirement income; expanding the sales tax to include a broad range of services. And if state legislators were smart, they would allow cities to capture their normal share of this, but include a provision that all of the new sales tax from this provision have to go straight towards the local pensions because the state is not the only government in Illinois with pension problems.
Just a few thoughts on the topic.
Comment by Smals Monday, May 14, 18 @ 3:18 pm
== this type of property tax at the state level, although at a smaller amount, maybe 0.25%==
I don’t think this would fly either. A $200K home would pay a $500 state property tax. If that homeowner is making $60K per year (state median household income), he’s essentially paying an extra 0.83% income tax, or 5.8% total.
The only thing this plan accomplishes is to make sitting politicians extremely uncomfortable.
Comment by City Zen Monday, May 14, 18 @ 3:29 pm
Watch how quick the death penalty comes back if a bill like this passed. You’d see legislative terms terminated faster than any electric chair.
Comment by NeverPoliticallyCorrect Monday, May 14, 18 @ 3:40 pm
Great idea. Just homeowners. Not apartments not commercial. Absolutely brilliant.
Comment by DuPage Saint Monday, May 14, 18 @ 4:06 pm
It’s pretty clear that enacting the property proposal is unrealistic. This has to seem pretty obvious to anyone who saw it, and even those who wrote it, whether or not they admit that. It also rests on the assumption that people who own homes are “more likely to have benefited from government services,” which, I think is a way of passing this off as not regressive? A lot wrong with that.
Given the difficulty of passing this and the poorly-reasoned explanation for dumping this on the property tax, you have to wonder if this plan is a shrewd way of moving the overton window on taxation to more broadly accept a graduated income tax.
If you live in a swing or even Republican district, the a graduated income tax doesn’t look as bad if a 30-year property tax increase looms. Also, they don’t seem to mention whether this factors in senior exemptions. If this is their goal, they should say the exemption doesn’t apply, and make this even more grotesque to any adult homeowner near age 50.
The proposal that Rauner has implicitly backed to enact a graduated income tax with brackets roughly in line with Wisconsin’s, or Iowa’s, or Missouri’s or Kentucky’s would certainly be better for legislators and taxpayers than this property tax plan.
Comment by Ramblers Monday, May 14, 18 @ 4:25 pm
Nothing is so permanent as a “temporary tax increase ” in Illinois. Good luck luck with convincing homeowners it’s not permanent.
Comment by Steve Monday, May 14, 18 @ 4:58 pm
Why is the fed even coming up with a proposal on a specific tax increase? I get them churning the numbers but who should pay (homeowners, commercial prop owners, retail purchasers, retirees, millionaires, or all income earners, etc) should not be an opinion of the fed. What the numbers are is their job not who should pay it.
Comment by Been There Monday, May 14, 18 @ 5:00 pm
That should be crunching the numbers. Churning is probably not in their playbook.
Comment by Been There Monday, May 14, 18 @ 5:23 pm
One step at a time.
Let’s start with legalizing marijuana and taxing the hell out of it. Especially to people with out of state licenses.
Then we will see where we are at and determine the next step.
Comment by Anon Monday, May 14, 18 @ 7:07 pm
The article about military leaders calling for changes in child care and education is as profound in its realities, as the property tax article was in its absurdities.
Only 30% of young people meet minimum standards for military service. The rest are too fat, too dumb, on drugs, or have a criminal history.
Society needs a wake up call; people are too complacent.
Comment by cdog Monday, May 14, 18 @ 9:24 pm
==The rest are too fat, too dumb, on drugs, or have a criminal history.==
You’re suggesting that 70% of the young population (whatever “young” means) fits into one of these four categories? And you base that “analysis” on what?
Comment by Demoralized Tuesday, May 15, 18 @ 7:42 am
I wonder if the 10 years vs 30 year discrepancy is due to the expectation that the exodus from Illinois will accelerate further eroding the tax base and thereby requiring a longer timeframe. They should add another 10 years to allow for Democrats deciding to spend the revenue generated rather than retire debt…
Comment by billthered Tuesday, May 15, 18 @ 12:12 pm