Judge: Boot unconstitutional ‘mansion tax’ from March 19 ballot

Judge: Boot unconstitutional ‘mansion tax’ from March 19 ballot

A Cook County judge ruled Feb. 23 Chicago Mayor Brandon Johnson’s “mansion tax” was unconstitutional and should be removed from the primary election ballot.

In another major blow to Chicago Mayor Brandon Johnson, a Cook County judge ruled Feb. 23 that his proposal to hike the city’s real estate transfer tax by $100 million was unconstitutional.

Judge Kathleen Burke ruled the question should be removed from the March 19 primary ballot in Chicago. The suit was filed by the Building Owners and Managers Association of Chicago, the Chicagoland Apartment Association, the Neighborhood Building Owners Alliance of Chicago and others who claimed the referendum was unconstitutional and violated state law by asking for both a tax cut and tax hike in the same question.

The proposal was called “Bring Chicago Home” by the Johnson administration, which claimed changing the tax imposed on real estate sales could raise $100 million a year for homeless relief efforts. While Johnson detailed the taxation part, he was fuzzy about how the money would help reduce homelessness.

The proposal was for a slight cut for properties that sold for less than $1 million, tripling the tax from $1 million to $1.5 million and quadrupling the tax above that amount. The tax on a $2 million property sale would be $16,000 more than at present. Most properties worth $1 million and up are commercial properties rather than residential, by a 9-to-1 ratio, one analysis found.

Chicago has millions it can spend on homelessness already from federal COVID-19 funds. The city has broad discretion to use these funds as needed. Chicago got nearly $1.9 billion in total from the federal government for pandemic relief funds, using $1.2 billion to bolster revenues.

Los Angeles recently implemented a similar real estate transfer tax policy, which has generated  a fraction of the money projected. It is hurting commercial property and rental property owners.

If implemented, the proposal would hit Chicago’s mom-and-pop businesses hard. This damage extends far beyond “the rich” Johnson claims will be affected by his so-called “mansion tax,” including many relatively modest properties small business owners are banking on for retirement funds.

And it would make it harder to start a business by requiring up-front taxation costs that do nothing to get the doors open. Creating jobs is a much more effective way to combat homelessness than putting more tax dollars in Chicago leaders’ hands in the hope they form an effective plan to help the homeless.

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