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Worst Idea in Illinois: Statewide Property Tax

WirePoints 10 May 2018 17 Comments

An audible gasp went out in the breakout room I was in at last month’s pension eventcosponsored by The Civic Federation and the Federal Reserve Bank of Chicago. That was when a speaker from the Chicago Fed proposed levying, across the state and in addition to current property taxes, a special property assessment they estimate would be about 1% of actual property value each year for 30 years.

Evidently, that wasn’t reality shock enough. This week the Chicago Fed published that proposal formally. It’s linked linked here.

It surely ranks among the most blatantly inhumane and foolish ideas we’ve seen yet.

fail

Homeowners with houses 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.

Is the Chicago Fed blind to human consequences? Confiscatory property tax rates have already robbed hundreds of thousands, maybe millions, of Illinois families of a their home equity — probably the lion’s share of whatever wealth they had.

Property taxes in many Illinois communities already exceed 3%, 4% and even 5% of home values.

In south Cook County they already average over 5%. Most of those communities are working class, often African-American. The Fed says maybe you could make the tax progressive by exempting lower values, but that’s very difficult to do and, if you did somehow exempt the poor and working class, the bill pushed to the others would be astronomical.

Those rates have already plunged many communities into death spirals, demanding an immediate solution, but the Chicago Fed apparently wants to pour on more of the accelerant.

Don’t they understand that nobody will build on or improve property when property taxes are that high? When taxes are 3% to 6%, that means that any value you add is subject to a perpetuity in that amount on the value of any improvements, senior to your ownership interest and your mortgage. Have they never been to our communities with countless dis-repaired abandoned homes and commercial properties, which are the result?

Get this, which is part of their reasoning: “New taxes wouldn’t affect people thinking of moving to Illinois. While they would have to pay higher property taxes, that would be offset by not having to pay as much for their new homes. In addition, current homeowners would not be able to avoid the new tax by selling their homes and moving because home prices should reflect the new tax burden quickly.”

In other words, just confiscate wealth from current owners because they will pay, whether they stay or not, through an immediate reduction in home value.

This proposed tax would only address the five state pensions. What about the other 650-plus pensions in Illinois, particularly those for overlapping jurisdictions in Chicago which are grossly underfunded? The Fed was asked that at last month’s seminar and they, without explanation, said they didn’t bother to cover that.

I’ve earlier met Rick Matoon, one of the Chicago Fed authors of the proposal. He’s a smart, likeable guy who I thought had lots of interesting information. For the life of me, however, I can’t understand how he would put his name on this proposal.

Property can’t leave so seize it. That’s the basic idea.

*Mark Glennon is founder and Executive Editor of Wirepoints.

17 Comments »

  • bre milken said:

    We need to look for new sources. Make IL the capital of Cannabis growing and exporting. Expand gambling and encourage out of state / country visitors for every attraction. Parts of IL are in Fracking zones. Lets open that up. A landing tax at the airports, say 100 a large plane. Consolidate taxing districts. Tear down empty building and offer as farm land. Put a tax on union membership. Encourage taxing districts to file bk. Amend the constitution to address pensions.

  • Don Wede said:

    I feel this is one of the worst ideas proposed that I have ever come across.
    What will people come up with next?

  • fee said:

    As an outsider, promises of benefits to state workers has been a Democrat idea. Many IL voted Democrat. They win statewide elections by 10+ points. Now they are complaining extra property taxes to meet the promises created by politicians they voted into office for the last 30+ years. Sorry IL residents, you created this financial mess, now own up to it.

  • Ed said:

    We need to increase Liberalism. We need to keep voting for Liberal Democrats and their policies (global warming taxes, higher minimum wage, higher business taxes and regulations, forcing business to pay for health care, increase taxes and fees on food and drink and hotels and all else.)
    Don’t abandon the Democrats. They have done right by us for the past 70 yeas.

  • ANN HERE said:

    The ONLY reason this State swings Democrat is because of Chicago. We REALLY need to divide the state into CHICAGO, above I-80, and below I-80 is Illinois!

    The loathing we have for Chicago politicians ruining this state is astounding. I’m ready to move to a conservative state where there is fiscal responsibility and no debt, because politicians have some brains.

  • James Anderson said:

    The Quickest way to turn a Democratic State Republican is to up the taxes of the Homeowners. its not like they can leave. they can only Change their Vote to get Rid of the Democrats.

  • Gmac said:

    Hey, I’ve got a crazy idea. How about we have a means-tested reduction of pension benefits for public employees. Wealthy retirees (Mike Madigan et al.) get nothing. They don’t need it anyway. Everyone else gets a “progressive” reduction based on final jobgrade/salary: anyone over six-figures gets 50% reduction in benefits, those making less are reduced less based on what it takes to meet payments without raising taxes on us private sector tax donkeys. Oh, I know it’s unconstitutional…but another crazy idea: amend the state constitution. You know, there’s another Constitution (federal)that guarantees equal protection of the law among all citizens. Having a favored class of citizens with government guaranteed pensions, not available to the rest of us, would seem to violate that.

  • Illinois Move “Up”in Race to Bottom00 | Be John Galt said:

    […] RUSH: The Chicago Federal Reserve has unveiled its solution to the pension problem. A speaker from the Chicago Fed — this is at an event that was sponsored by — it was last month — sponsored by the Civic Federation and the Federal Reserve Bank Chicago — Illinois has unfunded liabilities, particularly on pensions, that are off the charts. […]

  • Cisco God said:

    If this passes, I will start a new party. We will call it the “Pitchfork and Torches” party. We will march on Springfield with – you guessed it – pitchforks and torches. Failing that, a serious movement for splitting this retarded, corrupt cesspool of a state will begin. Failing that? mass exodus.

    I’d like to believe that our genius socialist politicians understand this and won’t provoke it – but never underestimate how low and criminal a socialist will go because, for them, the ends always justify the means. How else do you think we got here?

  • biggoofer said:

    They say you get the Government you vote for, is that true?

    If your latte is too hot on the first sip, you blow it cold.

    Instead, if you keep sipping the burning hot latte, you deserve to burn your tongue.

    For those Northwestern educated elites, latte is a metaphor here for Democrats.

  • News Briefs – 05/14/2018 | said:

    […] Illinois proposes a 1% property tax on everyone to cover pension shortfalls. Panic. […]

  • Knowledgeisgood said:

    Did anyone consider going to the pensioners and telling them we need to cut your payments?

    Why is it “fair” to steal from the homeowner and taxpayer … and not from the pensioner?

    Perhaps, you could cut the pensions by a small amount and raise the property tax by a small amount. Share the burden of poor fiscal planning.

  • J. Auclair said:

    And I thought CA was bad, but this makes it look half way decent.

  • Donkey Kong said:

    Illinois – I ain’t your boy. This will not end well for those who think they can get away with it. WAKE UP, BLUE MEANIES – you don’t care.

  • Rose said:

    We were about 20,000 votes short for voting for a conservative governor in the primaries (Jeanne Ives). I suspect that with the Chicago fraud, Ives probably really did win. Somehow we need to cut down on the fraud if we’re ever going to get out of this evil mess.

  • jeffP said:

    Just returned from a trip to Wisconsin over the weekend. I could not believe the number of huge warehouses and manufacturing companies being built just north of the Illinois/Wisconsin State line. I wonder why.

    You want to spur more growth in our neighboring states? Just keep doing what you are doing: raising taxes and increasing spending. The last time the income tax was raised was to pay pensions and reduce the backlog of unpaid bills. That worked out well, didn’t it?

    I hope you are happy in destroying the life savings of millions of families as their home equity represents their greatest asset. Property taxes aren’t necessarily correlated with a person’s income especially for long term owners in appreciating neighborhoods. Ask me!

    There is only one way to get out of this mess. Cut spending, amend the constitution, and cut taxes. Otherwise the state is in a death spiral from which it will never recover. Last one to leave Illinois please turn out the lights.

  • Jeff Dippel said:

    Very bad news for Illinois! People should protest this Idea.

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