You probably recall the firestorm that erupted in May after we wrote about a proposal by three Chicago Federal Reserve Bank economists for a statewide property tax dedicated to Illinois pensions.  Many shared our view that the idea was inhumane and foolish. Some communities ran ballot initiatives in opposition, which passed easily, hoping to head off any real discussion of the idea.

You’d think the overwhelming opposition would have ended the discussion. It hasn’t.

At least several very highly influential people continue to talk up the idea, including at least one with influence on Governor-elect Pritzker’s transition team. We have learned that from separate, reliable but confidential sources.

The initial paper on the idea proposed a charge of one percent of home value per year, across the state. As now being discussed, the rate might be lower, we are told, and there might be exemptions for communities that already have exorbitant property tax rates. That doesn’t change our view that it’s a horrible idea.

The express thinking behind the proposal is to seize property value because it can’t flee the state. “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,” the authors wrote.

Governor-elect Pritzker should be asked to disavow the idea and commit to opposing it.

Same for the two institutions that first provided a public forum for the idea – The Federal Reserve Bank of Chicago and The Civic Federation. Though neither of them officially endorsed or opposed the idea, it was at their jointly-sponsored conference in April that the proposal was first presented.

They should be put on the spot and asked to condemn the concept. The longer it has life the more property values suffer, so kill it.

Mark Glennon is founder and Executive Editor of Wirepoints.

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Freddy
1 year ago

Our homes and properties are only ATM machines for all the taxing bodies. What will happen when the ATM is empty? They have not found a way yet to take money directly from our bank accounts and paychecks and bypass real estate but if they do then we will see a massive revolt.

1 year ago

The worst state to live in and too bad so many can’t leave. It would be great if everyone could just leave and let the corrupt politicians have this backward thinking state to themselves.

Richard
1 year ago

So the Federal Reserve and the The Civic Federation have time to hold conferences to make the innovative suggestion that another tax be strapped on to the backs of IL citizens to pay for corrupt and unsustainable pensions. Some real deep thinkers over there, got to wonder what bosses they answer too. Madigan himself couldn’t have suggested a better recommendation.

Wally the Wise
1 year ago

“A man’s home is NOT his castle”…….in Illinois; it’s the states

Dean westrom
1 year ago

Forget about this the Democrats have a super majority they don’t care if You don’t like it, they will do whatever they want and NO ONE OR NO ARTICLE will stop them. ILLINOIS VOTERS ARE SO SO STUPID and the Democrats know it. Good luck to all you losers.

Rick
1 year ago
Reply to  Dean westrom

Not only that, the people won’t complain because it will be another line item on their property tax bill, which their escrow pays so they don’t even read it. Escrow is the whole reason they can get away with this crap.

ed s
1 year ago
Reply to  Rick

Exactly on point. I recently asked about this to a loan officer at a local bank that said the same thing as you posted. People have no idea and at the same time are too lazy to even care, they have to spend their time memorizing sport team statistics you know.

P M
1 year ago
Reply to  ed s

LOL…yep, you nailed the problem, lazy voters who are too busy with the Cubs and the Bears to perform their civic duty to watchdog their government.

TLM
1 year ago

Sad that elected officials are so corrupt and essentially “bought” that they refuse to change the laws of the state to fix the problem. Instead, it’s business as usual for these snakes, and the despicable pension crisis continues to worsen. It’s likely that the problem is actually no longer even fixable without flat out bankruptcy.

world with end
1 year ago

This is another poorly thought-out scheme by the IL pols that will cause even more people to relocate out of state and keep the death spiral going. Why do the pols keep coming up with these losing ideas?

P M
1 year ago

The tax that is need is to start taxing churches,charities,and social service agencies. In poor communities the churches as taxpayer subsidized Democratic recruitment drives. The churches and social service agencies actively assist illegal aliens gaining entry to the U.S. and a plethora of taxpayer funded benefits which greatly impacts budgets.

Rick
1 year ago

Property taxes are “collected” not paid by the owner unless they have no mortgage. Attaching pension payments to a tax that is collected not paid is a sniveling, cowardly way to confiscate the funds. They should just send everyone a bill instead, be up front, instead of burying it. It’s just another way to slow boil a frog.

Freddy
1 year ago

Mark-Ted. I believe one of two main problems for ultra high property taxes are hidden in plain sight. It is PTELL (property tax extension law limit) . 39 counties voted for this and now have some of the highest tax rates in Illinois. Under Ptell taxing bodies can never get less revenue then was (LEVIED) not billed or collected from the year before PLUS 5% or 1/2 half of inflation whichever is less. This levy comes before any deductions like homestead or seniors etc. So anyone getting a tax abatement like a new business or a decrease in property value… Read more »

NB-Chicago
1 year ago

my (and my co-workers) biggest fear, as a 60 year old who scrimped and scraped to pay off his mortgage–(it is the biggest part of my retirement), with a rescission on the horizon is i will be stuck with a home that’s impossible to sell except a a huge loss.

Rick
1 year ago
Reply to  NB-Chicago

Pre paying a mortgage in Illinois is not wise these days. Just treat it like rent. And when you go to.sell strip every last shelf, tv wire, and light bulb out of the place and take it with you. Best to empty the whole place out bare before going to market, improvements that can be uninstalled and taken won’t improve the value anyway. A home is not an “investment”.

1 year ago

This will pass. Cook County and Chicago need cover.

Mike Williams
1 year ago

Comment Deleted

Mike Williams
1 year ago

Can you imagine someone in another state considering a competitive job offer in Illinois and then going online to check out Illinois homes? With this new tax idea added to existing real estate taxes, the total tax on a $200,000 Illinois home could reach $10,000. That’s $8,000 higher than much of the country. So the effect of the new tax is that; A) very few people would be willing to relocate to Illinois B) causing Illinois to have to pay higher wages to attract labor C) giving other states a competitive advantage D) causing some Illinois businesses to leave (or… Read more »

P M
1 year ago
Reply to  Mike Williams

Actually this just happened at a large insurer that was trying to recruit a FCAS with 10 years of experience. They went through 3 interviews, were extended the offer and then said thanks but no thanks citing the State’s fiscal issues and the unpredictable property tax rates as well as the high number of English learners and low income households in the schools. Diversity often sounds good to some people until they realize their own children’s development is being retarded because the majority of discretionary resources are directed at bringing up those below the bar to the detriment of those… Read more »

Mike Williams
1 year ago
Reply to  P M

P M, I have no kids but couldn’t imagine someone with kids relocating to Chicago. I would have to assume only bad parents would do such a thing.

P M
1 year ago
Reply to  Mike Williams

I agree. I travel a lot still (48 weeks a year), and Illinois has changed so much since my childhood. It is a very permissive state now in terms of culture in Chicago and the outer burbs. Even Kane County, once a bastion of traditional midwestern values has turned toward permissiveness. I can’t imagine rasining children here if you did not intend to homeschool.

P M
1 year ago
Reply to  P M

Addendum, an FCAS is a Fellow in Casualty Actuary Society. It is fairly restricted designation. There are a bit over 4000 of them worldwide. The designation takes many folks 10 years to obtain so the pool of talent is not that wide. It will be interesting to see if companies in IL will face a talent problem as the boomers retire. Come work in Illinois featuring high taxes, cold winters, hot summers, roving power outages and brownouts and lots of disease infested illegal third world aliens so pass lice , tuberculosis, and Hepatitis to your children. https://en.wikipedia.org/wiki/Casualty_Actuarial_Society

Rick
1 year ago
Reply to  P M

The last thing Illinois needs is more corrupt actuaries. FCAS credentials are meaningless , actuaries are bought and paid for in Illinois. They are the enforcers for the shylocks in office. It’s a discusting profession.

P M
1 year ago
Reply to  Rick

Kind of rude aren’t you, disparaging an entire actual profession based on the actions of a few?

And by the way you do not know of what you speak. An FCAS is a designation awarded by the CAS, they have notably higher standards than the SOA(which has pension actuaries). In fact the CAS just rejected a merger with the SOA three weeks ago in part based on the difference in standards.

Rick
1 year ago
Reply to  P M

There is much empiracle proof that actuaries have ruined this state. And now they are even more useless. When all of government runs on borrowed money, the actuaries job is to only figure out how to calculate (fake) more borrowing so someone can present those fake numbers to rating agencies to justify not moving to junk. The actuary makes all the wrongs look right. Supposedly they are smart, the problem is they are smarter about who signs their paycheck and they know the license and credentials they were handed came from themselves. They are the most dishonest member of the… Read more »

Bob Out of Here
1 year ago
Reply to  P M

Makes you wonder how much of that figured into Amazon passing on Chicago. Surprised the person being interviewed didn’t research the city/state first, would have saved a lot of time.

P M
1 year ago

Not really. Actuaries often form relationship with specialty recruiters, who sort of manage their career for them. In other words often an Actuary does not actively engage in a job search, their placement firm contacts them when they know they have spent x-amount of years at a job and see position that would be a step up for them. Often the firm does a bit of a salesjob to get them to consider moving. Often they go through the process and get an offer and then it is often their spouse that pulls the plug on the move. Essentially the… Read more »

Freddy
1 year ago
Reply to  Mike Williams

Mike. Here in Rockford our tax rate is 14.8363 on 1/3rd value. With the homeowner deduction you pay $9,000.68 on a $200K home. Add in the 1% and it would $11,000. We should do what Homeowners defense association.com from Dupage county is trying to do a 1% hardcap on total value or in your example $2,000 tax for the $200K home. I now pay $6,900 for a $157K home add in another $1,570 and I lose my home.

Mike Williams
1 year ago
Reply to  Freddy

Freddy, I sold my NW sub home 2 years ago for $205,000. The tax was almost $8,000 annually at that time. I could afford the tax but I still sold the house. I guess $8,000 was my personal breaking point. Some of my former neighbors still haven’t hit their breaking point, but I’m guessing with the additional/new proposed tax that pushes it to $10,000, many of those neighbors will also be ready to sell. I just wonder if there will be anybody willing to buy a modest home with that kind of RE tax.

P M
1 year ago
Reply to  Mike Williams

It certainly keeps people from expanding their homes (adding bathrooms etc) or upsizing. Money paid in property taxes is simply flushing money down the toilet.

mmack
1 year ago
Reply to  Freddy

You were lucky to pay $9,0000. I lived In Bolingbrook (Will County) and our last tax bill for 2016 was $12,000 for a house purchased for $325K in 2004. Of course to sell the house last year we took a nearly $45K haircut from the purchase price, not including the upgrades we made in the thirteen years we lived there. I moved to another midwestern state and pay 1% capped property tax, which works out to $3,200 for a $305K house that is bigger than the house we had in Bolingbrook. But yeah Illinois, go ahead and tax anything and… Read more »