Report: $800M of property tax burden in Chicago shifted onto poorer homeowners from 2011-2015
University of Chicago researchers have found inaccurate and unfair assessments by the Cook County Assessor’s Office led to $800 million of the property tax burden shifting from owners of Chicago homes in the top 10 percent (by sale price) to owners of homes in the bottom 70 percent.
A new report by University of Chicago researchers shows Cook County’s broken property tax system has resulted in a transfer of $2.2 billion of the property tax burden to overtaxed Chicago homeowners from undertaxed Chicago homeowners from 2011 through 2015. This especially hurt poorer homeowners, who were much likelier to be overtaxed.
The report quantifies the effects of Cook County’s regressive property assessments, which were exposed by Chicago Tribune reporters in 2017 and confirmed by the Civic Consulting Alliance in a report released in February 2018. The new data reveal that of the $2.2 billion shift in the property tax burden, $800 million was transferred from owners of Chicago homes in the top 10 percent of sale prices to other city homeowners.
Researchers from the University of Chicago’s Harris School of Public Policy examined sale prices of homes in Chicago from 2011 through 2015 to see the actual market value of homes, compared with the assessed value as determined by the Cook County Assessor’s Office.
The assessed value is supposed to reflect what a home could fetch on the market, and determines a property owner’s share of the overall tax burden. If a house is underassessed relative to its market value, that homeowner pays less than he or she would have paid if the assessment were accurate. If a house is overassessed relative to its market value, that homeowner pays more than he or she should.
The Tribune, Civic Consulting Alliance and University of Chicago reports all show that in Cook County, high-value properties are more often underassessed than less expensive properties, which means poorer homeowners pay more in taxes than they should, and wealthier homeowners pay less.
University of Chicago researchers found that Cook County’s undervaluing of expensive residential properties resulted in owners of the top 10 percent of homes (by sale price) paying $800 million less over a five-year period than they should have in property taxes. This means that $800 million of the property tax burden was shifted onto owners of less valuable property – specifically, owners of homes in the bottom 70 percent.
The extent of regressivity in assessments is further demonstrated by the fact that owners of the bottom 30 percent of homes (by sale price) were overtaxed by 20 percent or more, while the owners of the top 10 percent of homes were undertaxed by 20 percent.
Chicago is a high-tax city where local officials have raised property taxes multiple times in recent years to shore up worker pensions and pay for other spending. It is profoundly unjust that the burden of those taxes is distributed based on unfair and inaccurate assessments, to the detriment of poorer homeowners. The University of Chicago report is just the latest evidence that Cook County’s property tax assessment system needs to be completely overhauled.