‘Fair tax’ is no fix for out-of-control Cook County property taxes
Cook County property taxes have grown at triple the rate of the cost of living. The “fair tax” backers promise it will bring property tax relief, but the evidence refutes their claim.
Property taxes billed by Cook County’s local governments has been nearly triple the rate of inflation during the past 20 years, according to a new study.
And next year Chicago residents are facing a $93.9 million property tax hike, as well as a pitch for automatic future property tax hikes tied inflation, as part of Mayor Lori Lightfoot’s proposed 2021 budget.
Research by the Illinois Policy Institute shows higher income taxes do not lower property taxes. There was no correlation between the two across all 50 states. Also, all seven states without any income taxes all have lower property taxes than Illinois.
While the regional cost of living has risen by 36%, property taxes across Cook County have increased by 99% between 2000 and 2019 – according to a new study from Cook County Treasurer Maria Pappas. Meanwhile, wages in Cook County have risen by 57% during the same period.
Chicago has fared even worse since 2000, as property taxes increased by 115% across the city – residential property taxes alone ballooned by 164%. The suburbs have felt an 87% increase during the past two decades, the study shows.
Property tax relief was a critical selling point in 2019 when Pritzker was gathering state lawmakers’ votes to put his “fair tax” on the ballot. In response, he formed a 90-member task force to recommend property tax relief, but the effort dissolved without any agreement on potential solutions.
Property taxpayers are also worried about the issue in Cook County and elsewhere, which is why Pritzker’s ads claim higher income taxes will allow for lower property taxes. That idea is not new, but the evidence shows that is not how it works in real life.
State income tax hikes in 2011 and 2017, along with a new school funding formula in 2017 that provided $350 million in annual increases for state education spending, have not delivered any property tax relief. That’s because Illinois’ high property taxes are primarily driven by out-of-control pension costs.
Education was one area where the state increased spending during the past 20 years. Classrooms saw little of that money, because pensions ate two-thirds of it. The new state education dollars were outpaced by a 501% jump in pension spending and a 127% increase in health insurance spending.
Plus, from 1996 to 2016 Illinois property taxes rose from around the average for U.S. states to the second highest in the nation.
Higher income taxes also failed to cut property taxes in Connecticut, where voters were promised property tax relief if they approved a progressive tax in 1996. Instead, the state’s property tax burden continued to rise at historic rates, increasing 35%. That’s on top of a 13% jump in middle-class income taxes, which Connecticut voters had been promised would drop under a progressive tax.
Like Connecticut, a progressive income tax could give Illinois even higher property taxes as well as higher income taxes.
Now, Illinois has a flat tax protection built into the state constitution that mandates everyone be taxed the same. What the Nov. 3 “fair tax” question actually asks is to eliminate the flat tax so state lawmakers with a simple majority vote can change tax brackets and rates at will. It would allow them to divide opposition to tax increases, making hikes easier to pass with fewer lawmakers paying a political price as happened when nearly one-third resigned or were ousted after the last statewide tax increase in 2017.
It would also remove any incentive for lawmakers to act on reforms or property tax relief. Instead, they could use tax hikes to fill budget holes on the backs of hardworking Illinoisans such as Jennifer Roberts, a hospice chaplain in Bloomington.
“Our politicians need to stop trying to tax us more and find real solutions to fix the budget, without making the people of Illinois pay for those mistakes,” she said.
Local governments suffering from the fallout of the COVID-19 pandemic will again look to property tax increases as a means of filling budget holes, as Chicago’s mayor is doing. But Lightfoot used her city budget address to call on Springfield for pension reform.
“To our partners in Springfield – as I have said before, we’re in this together, we’ve done great things together already in my short time in office – and I know we can work together to fully fund the Local Government Distributive Fund and avoid sending us unfunded mandates,” she said. “And, yes, we still need real pension reform.”
The property tax study by Cook County’s treasurer offers a level of detail unavailable until now, combined with an online tool that allows home and business owners to see how their property tax burden has grown during the past two decades.
“Everyone is cutting back, but the property tax bill is going up. It’s not working,” Pappas told the Chicago Tribune.
Trying to fix a broken property tax system by imposing an income tax system that is broken before it even starts is not the way to fix Illinois state or local government finances. Imposing $3 billion in new taxes as the state struggles to recover from the COVID-19 recession is foolish to the vast majority of economists.
So why would voters accept Pritzker’s promises and his “fair tax” on Nov. 3?
What Illinois really needs is state lawmakers to act on pension reform, not on reforming how they can take other people’s money.
How will the progressive tax affect your home value?
lower than under Illinois’ current income tax.
home details above
This tool compares the expected sale price based on the most recent 10-year average house price appreciation with the expected change in housing prices under the proposed tax increase that would go into effect Jan. 1, 2021, should voters approve a progressive tax constitutional amendment Nov. 3. This calculation assumes no change in other owner's costs such as mortgage rates, maintenance costs, property taxes and the federal income tax liability.