By: Ted Dabrowski and John Klingner
Mayor Brandon Johnson and city officials are determined to push through a tax hike on Chicagoans, never mind the risk of Chicago entering into a doom loop like the one San Francisco is in.
Johnson’s latest plan is to raise the city’s real estate transfer tax on properties valued at $1 million and above, adding at least another $100 million burden on high-value properties. It’s the last thing Chicago businesses need. Workers are still staying at home in huge numbers. Vacancy rates are high and set to grow higher as companies shrink their square-footage. Crime is still rising. And Chicago’s commercial property taxes are already the highest in the nation.
Supporters dub the real estate transfer tax hike as the “mansion tax” because it’s meant to hit the wealthy. Officials say the new revenues are to be used for tackling the city’s homelessness problem.
Mayor Johnson just signed-off on the proposal, but the city council has to vote to place the tax referendum on the March primary ballot for Chicagoans to vote on. And only if the voters approve will the council be able to pass the tax hike into law.
The latest version of the tax has a progressive three-tier structure, with different effective tax rates for property values under $1 million, between $1 million and $1.5 million, and more than $1.5 million. Chicagoans with properties under $1 million would actually see their tax rate cut to 0.6 percent from the current 0.75 percent.
The graphic below breaks down the proposed tax structure in detail.
The “mansion tax” is bad enough for high-value residential property owners. But what’s even worse is that the term is grossly misleading. The real estate transfer tax doesn’t just apply to high-end residential property, but to commercial properties as well.
City Hall is counting on Chicagoans to not care about voting to kick the city’s struggling businesses when they’re down.
Businesses are already forced to pay a massive premium to operate in Chicago, namely, the nation’s highest commercial property taxes, according to the Lincoln Institute of Land Policy’s latest 50-State Property Tax Comparison Study.
Chicago businesses paid an average commercial tax rate of 4.01% in 2022, beating out Detroit for the top spot when it comes to the nation’s biggest cities.
That’s an expensive burden to add on to – especially when the city’s downtown recovery is stalling out.
Read the new Joel Kotkin piece titled The Death of the Great American City and you’ll be reminded of the challenges facing big cities like Chicago, in particular, the absence of downtown office workers.
As office occupancy rates remain abysmal, they threaten city tax revenues and even the future of cities themselves. The Chicago metro area’s occupancy rate has been stuck at just over 50 percent for most of this year, according to card swipe security company Kastle Systems. 
And Crain’s warns that the city’s businesses property sector is already struggling: “during the first half of this year, commercial property sales totaled just under $5.3 billion, a 51% decrease from the same period last year.”
Kotkin predicts for big cities that “the crunch is coming, and it won’t be pretty.” Unfortunately, more tax hikes could make it downright ugly.
Read more from Wirepoints:
- Chicago Democratic alderman challenges ‘far-left extremism that’s taking over city politics’
- 204 Chicago homicides in Mayor Johnson’s first 100 days – including four teenagers killed last weekend
- Chicago’s commercial ‘doom-loop’ could result in a property tax hike on homeowners as large as 22%
- Walmart’s flight from Chicago: ‘Corporate racism?’ Or crime, taxes and dysfunction?
- More cops on Chicago’s streets won’t help until criminals are prosecuted and sentenced
Audio and summary 
If this bill passes, say goodbye to local control over all Illinois parks and expect to see open drug and alcohol use, needles, no sanitation and fire hazards, but no ordinary park users.
Here some info on mansion taxes in other areas. Vermont’s tax starts at only $100K value which will probably be in Chicago in a few years.
https://www.cnn.com/2019/10/29/success/mansion-tax-real-estate/index.html
https://abc7chicago.com/amp/chicago-homeless-population-shelter-shelters/12742383/
https://illinoisanswers.org/2023/08/10/chicago-homeless-people-city-spent-15-percent-52-million-federal-money/#:~:text=The%20city%20has%20budgeted%20more,far%20tells%20a%20different%20story.
According to there articles Chicago has budgeted about $200 million for homeless people and there are 3900 homeless people in Chicago. That would come out to be $57,000 per homeless person. That is before state and federal and private spending, it seems a bit outlandish to raise taxes and want to spend more on homelessness. How about we help these poor people with the large amount of money already devoted to supposedly helping?
https://illinoisanswers.org/2023/08/10/chicago-homeless-people-city-spent-15-percent-52-million-federal-money/#:~:text=The%20city%20has%20budgeted%20more,far%20tells%20a%20different%20story.
Furthermore, that money spent on “homeless people” really is spent on large contracts to those agencies who provide “homeless” social services. Very profitable business model.
The poor are with you always…..
Wait until the mask mandates and lock downs come in a few months. And make no mistake about it, they are coming. May as well play a funeral dirge for the commercial properties.
Got to guarantee that election win in 2024 so you are absolutely right!
Well, he did say “first we get the money”. The Uber rich will just sell properties to each other and endure this. But it does create a huge impediment for any frugal person or business in search of value to grow. Then at some point the Uber rich will say “why the hell am I investing here” and head to greener pastures. I’m sitting poolside in Vegas right now, pondering why every state we’ve driven through for the past three weeks is heavenly and how I have to go back to IL tomorrow.
All you need to do is pull up the stats for New York as to how much taxable income has moved out. Ken Griffin already left to the joy of liberals. Griffin was just the start.
An economist/talking head the other day thinks the party is over in blue cities – NYC, San Francisco, LA, Chicago and so on. What he meant is that these cities simply won’t return to anywhere their pre-pandemic economic status. The leaders in these cities don’t view local governments as entities which provide essential services, but rather as hubs to redistribute income to preferred political constituents. This is hardly a new state of affairs. But the redistribution state is expensive. This economist thinks cutting taxes and making the cities investment friendly is the only forward, but that is wholly unrealistic. There… Read more »
Yes, I agree with this entirely, but it’s the MBA type academic analysis of the situation. The big city mayors, like Brandon Johnson aren’t acting with this analysis in mind, because their mid-80 IQ brains can’t comprehend it. Brandon Johnson, SF Mayor London Breed (not so much NYC mayor Eric Adams, he seems smarter), they are just looting the city. And because, now when I tell you this, I’m just telling you how they think, I don’t think this way, but they do. Brandon Johnson really believes that the Blacks now run Chicago and Cook County. They believe they fought… Read more »
The Chinese had a chance. Becoming a one man totalitarian state has put them beyond recovery. They need foreign investment both in terms of money and talent and it is not going to come. Strangle Hong Kong and gee, little wonder capital flees. Compounding their problems is a one of a kind demographic collapse unique to civilized history – so significant that predictions other than that things will go bad are difficult to make. Chicago too will have a demographic problem. There will be too few producers to sustain the significant government overhead and costs. Of course Johnson has very… Read more »
Politically, if transfer tax passes in march for projected $100 mil, then you can assume before ink is dry, city/ Brandon will issue bond for 3 x’s $100 mil or some crazy sum to dole out to programs & political buddies (i.e. CTU) before dem convention….or maybe wp could comment how that could work?
Or, maybe it doesn’t really matter if the Transfer Tax generates $100 mil or $50 mil a year or whatever. What’s going to be important for CTU/Brandon, Stacy, Tony, Sigcho-Lopez, and the crew is come dem convention time they will have passed some kind of token homeless bill that they can get up on stage with Bernie, Warren ,AOC & alshimer Joe and claim they socked it to the millionaires…or better yet have news conference at
CPSCTUs new “sustainable community school”–Brighton Park Elementary and claim all the kids are not homeless thanks to progressive Transfer Tax.All great business minds who are great at spending other people’s money on program after program. LOL No clue on even the basic function of a how a business works or how to create policies which foster job creation. No clue means disaster for everyone. Left for Texas 2 years ago.
Because they are looting the treasury. It’s really that simple. They voted to spend money. My cheap community (city, township, park district, school boards, etc) used to be run by Republicans and the voters didn’t want to spend a dime on anything, to the point that the city infrastructure was very old and decrepit. The Democrat voters have taken a majority of most governmental units and they’ve used old infrastructure as an opportunity to spend with reckless abandon, no expense was too much, and now we have new schools, upgraded library, new public works and essential services buildings, new parks,… Read more »
$100 mil / 66,000 homeless (city claims) = a meager equity hustle feel good drop in bucket $1,515 per homeless (did i do math right?). Also, $100 mil could be used for ‘new arrival’ migrants which city has already spent over $120 mil (?) In 8 months on supposedly 13,000 migrants
So 100 million isn’t enough. Start advocating for more tax increases if you want more money to go to the homeless.
you mean you don’t have any room to take in a few homeless or hire as house help on your taxpayer paid for 12,000 sf estate with indoor-outdoor pool, 15 car garage, private golf course and heliport? (did I forget anything?)
I’m not the one complaining about 100 million not being enough. You should be the one to offer to feed and clothe them. You complain about spending too much and now complain that it’s not enough. Pick a lane.
I ride in the –i pay way to much for everything, especially my gov services lane. How about u?
It goes to the voters. If they are STUPID enough to vote for it then good!.
And when Chicago becomes a black hole totally devoid of all businesses and tax payers then what? Do they have to burn it down so they can build it up again? Problem is the same people who burn it down, will build it back. No matter what, Chicago is destined to fail.
No Marie, there’s a big difference between a society’s creative class and it’s destructive class. Growing up in Detroit in the 1960s and pushing 70 years old I can vouch that the people that destroyed Detroit were incapable of building anything.
Is this going to apply to multifamily properties? If so, it will increase rents…. and taxes for landlords who live in units that are worth way less than the entire property.
New Transfer Tax is a tax on BUYERS. It’s a real-estate growth/ new apartment housing killer. per crains:
The seller will ultimately bear tax burden via a lower sales price.
Yup, and who ever pays, the tax will be passed on to renters/leasers
This guy. He is awesome… Why you ask? Because he is so infantile he doesn’t understand his actions will get us to rock bottom in great haste… Allowing the unaware centrists to actually get of their apologist butts and bring sanity back to Chicago… Or, we simply fall into the earth…
Note Mayor Johnson’s ZERO attention to cutting costs.
Nope, it’s just “spend baby, spend!”. He even has newly-formed advisory “tax” committee, dedicated to proposing new taxes and fees ahead of new expenditures.
What happened to his campaign promise of “fine-tooth combing of budgets”??
If one were to architect a rational progressive RETT, you would set out to capture the top 5% of each zoning type, not apply one rate plan to all zones. All sales are not created equal. A $1M condo or $3M mansion might be in the top 5% of residential SFH, but a $1M apartment building with 5 units probably doesn’t fall in the top 5% of all apartment buildings. A luxury rental high rise or downtown office skyscraper should be grouped with all other multi-family housing or commercial properties. That way, you capture the high-end of the market in… Read more »
The 5 flat will become 5 different condos.problem solved
Chicago is a tale of two cities: the rich north and northwest sides, and the poor south and west sides. They are two separate places. The rich areas have crime rates comparable to western Europe and wealth beyond imagination. The poor areas of Chicago are blighted hellholes with crime rates some of the highest in the entire civilized world, where people can’t read or write, and there is low trust. They don’t live in your world and you don’t live in theirs. BJ was elected by their world. Likely through some voter fraud out of the southside wards where 98%+… Read more »
In a few years, the ‘mansion tax’ will be extended down to $500k homes and the tax rate doubled. Johnson, like Obama, is a Marxist. Marxists believe in confiscation of private wealth. Remember Obama claimed to all of us ‘you didn’t build that’ so therefore it’s ok for me to take it from you and do with it as I see fit since I’m more virtuous than you.
You mean confiscate “other people’s wealth”, while diligently growing their own personal wealth. Democrat-marxists become quite wealthy while in office, Pelosi, AOC and Ilhan Omar included, despite their decidely-middle income wages as elected officials.
65% of eligible voters stayed home. Don’t blame this disaster on voter fraud. It was caused by voter apathy.
It wouldn’t have made any difference if there was 100% voter turnout. The results would have been the same: A Johnson win, based upon the socioeconomic patterns of the voters.
The choice was a Leftist or Marxist. I think folks figured it didn’t really matter, and many will exit town before the full collapse.
“BJ was elected by their world”???–No, BJ won largely on northside, lakefront lib vote,,,,,because that’s who votes.
Curley effect
Daley would be proud.
Another scam to create revenue for social services that somehow never gets where it’s supposed to go.
No surprise here. Good government under Root Causes Johnson is projecting the illusion of equity, not actual equity and good governance.
The BLM BJ support base in the South and West sides will vote for this thinking they’re sticking it to “the other folk”. What they don’t realize is that they will soon be the only people left in Chicago, and BLM BJ will come looking for them to pay the freight for the city.
I think they know the ‘other folk’ will eventually be run out of the city. They aren’t worried about paying higher taxes in the future, because they have too little money now to pay taxes anyways. The ultimate goal is to run the ‘other folk’ out of the city. They don’t care if the city collapses into a baltimore or detriot. Baltimore still has nearly 600,000 people and Detroit almost 640,000. There will never be a rock bottom point for some people, they are happy living in high crime hellholes. They’d rather live in blight and squalor than to share… Read more »
Look at the tax-delinquent roll for Cook County real estate properties.
Look at list of delinquent property owners re: Water Department billings.
These folks shirking their real estate taxes and water bills, and their utility bills (but never their cell-phone bill) are happy to support more taxation of law-abiding, bill-paying folks.
More taxes for the Chicago voters who get what they voted for…cool.
The voters getting hit with the mansion tax didn’t vote for Johnson. And that’s kind of the point.
I am not so sure on that. My speculation is many of those well to do liberal housewives voted for Johnson as he fit the most liberal of the two candidates. Just my speculation as I said but nothing surprises me from that voting block
Sure, there were probably some, but they were outliers. The post-election voter map shows pretty clear voting patterns between Vallas/Johnson by neighborhood.
https://blockclubchicago.org/2023/04/05/map-heres-how-your-neighborhood-voted-in-the-2023-chicago-mayoral-election-2/
And those that didn’t vote voted for the current situation. I don’t think those maps reflect that
Both candidates had low info voters that failed to show.
Suspect a fair number of “mansion tax” folks also “virtue-signaled” their votes for Johnson.
IL supposedly has a ‘lock box’ for gas tax monies to only be spent on roads only to find out that all kinds of things unrelated to asphalt and concrete and steel are considered roads now. So we have unfilled potholes galore. Same will happen with this ‘mansion’ tax – this is a new slush fund for corrupt Democrats to play with. Enjoy Chicago – you voted for it.
Correct. Let all the Chicago residents suffer more and more until they call out, “Please, no more”, and finally vote non-Democrat.
A democrap’s non democrat is called a communist.
This will never happen. Never, ever, not going to happen. They’ll vote for Reform or Progressive Democrats, even libertarians (as shown by the previous Kim Foxx election) before they vote Republican. You must understand, and history shows, they’d rather turn the cities into blighted hellholes than vote Republican. The cities were Democrat hellholes during the late 60’s, all of the 70’s, 80’s and the 90’s. Nearly two generations of high crime, nearly 1,000 murders a year in some of those years, thousands more shootings than we have today, and blight everywhere as far as the eye could see – gentrification… Read more »
It seems Chicago is more tribal than ever.
Yup, remember when the Illinois Lotto in the late 70’s was sold to voters so that all revenue would go towards education. Technically it did, but equal amounts ear marked for education from taxes were then diverted to general fund for other spending. I learned then that politicians were and are still mostly con men (and women).
Steve, it did go yo education — sort of. That’s why your typical teacher is retired by her mid fifties with health care paid too.
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