The arrival of new property tax valuations last year sent many Chicagoans into a panic, with assessed property values spiking in many communities since the last assessment cycle three years ago. Of course, the panic was largely without merit — a decrease in rates typically offsets any assessment increase, resulting in a complete wash.
Outraged messages filled bulletin boards (“My mother’s tax bill in Lake View just went from $7,500, which was obscene, to $11,500. That’s a FIFTY-THREE percent increase”) and I was left to wonder whether my tax bill had gotten lost in the mail or something. No, of course not — I got a bill two weeks ago which was substantially the same as the ones issued last year. (How, exactly, these people managed to buy houses without understanding how property taxes work is what mystifies me.)
In an effort to squelch calls for various elected officials’ heads, County Assessor Houlihan released estimated tax bills for the city and many suburbs, which naturally showed only an incremental increase in taxes paid:
“Houlihan, who lives in the Lakeview neighborhood, saw the assessment on his three-story greystone increase 30 percent. But his projections indicate his tax bill would only rise by less than 6 percent, to $18,129…
“The assessor’s estimates show the city’s tax rate dropping to 6.021 percent from 7.277 percent. The multiplier is shown as declining to 2.41 from 2.4689.”
Furthermore, property tax revolts always struck me as being at least a bit unfair. Sure, there are some groups which are genuinely impacted by rising property taxes — seniors in particular. Yet the overall thrust of much of the complaining is that public policy needs to be tilted even more in favor of homeowners, who already have secured massive entitlements from all levels of government — home mortgage interest deduction, “nest egg” capital gains exemption, and in Cook County, a lower “equalized assessed value” on residential property (such that residential pays half the property taxes of commercial uses, including large apartment buildings).
All of these government incentives for homeownership have the overall effect of raising housing prices beyond what they would be without said incentives. Ever-higher housing prices are considered by many homeowners to be their god-given right, for some reason, and those people who expect to profit on their homes eventually should relish paying their rising property taxes.
A property tax “revolt” won’t necessarily get anyone anywhere, either. In California, Proposition 13 was passed in the late 1970s, an era of high and rising property valuations — yet its passage did not do anything to slow the pace of gentrification there since. It has, however, resulted in severe cuts to local government spending, rising sales taxes and often regressive “user fees”, budget crises during recessions, incredible tax base competition between municipalities (resulting in suburban sprawl), and wealthy long-term property owners (including landlords!) getting off scot-free — essentially paying the same in taxes as they did in 1978.
Just because some people pay less in property taxes doesn’t mean that the taxes won’t come from poor people in another way — higher sales taxes, more gambling, a higher income tax (which would be okay if the state constitution didn’t require a flat rate), or regressive fees. Make no mistake about it: almost every “property tax relief” option you’ve seen floated in recent months will benefit multimillion-dollar Gold Coast mansions as much as (if not more than) they’ll benefit abuelitas in Back of the Yards.
At the same time, many of the same put-upon taxpayers I’ve heard from naturally want to have their cake and eat it, too: complaints about a lack of city services seem directly tied to complaints about one’s tax bill. The complainants typically point at their neighborhood’s lack of services and contrast that to what they see as money being spent downtown — which is a farce, since nearly two-thirds of all Cook County’s property taxes are paid just by downtown Chicago. (Some services, like daily street sweeping, are paid for through supplementary property taxes paid only downtown.) Sure, downtown gets more services, but shouldn’t services be roughly proportionate to taxes paid?
Then again, pretty much the whole city has been getting shortchanged for decades. For instance, Chinatown’s only park was eliminated by the freeways, and its replacement (Ping Tom) wasn’t built until a few years ago — and even then, it was only with TIF money. (Its expansion will only happen thanks to the residential boom in the South Loop; impact fees paid by all those new condos will underwrite the park.)
Or, to take another example, the Bloomingdale Trail is an expensive ($10M, at least) proposition. How did/will Paris and New York City paid/pay for their elevated trails? First, through breathtakingly high taxes. Second, their city cores are packed to the gills (population densities four to eight times as high as in “crowded” north side Chicago!) with rich people, all of whom pay high taxes. Third, the federal government pays most of the bills, anyways. And fourth, something of this scale takes a long time to get to fruition. Millennium Park, every neighborhood activist’s favorite whipping boy, was first proposed back in the 1970s.
On a grand scale, part of the city’s fiscal problem is that Chicago is getting shortchanged by Illinois, and Illinois by Washington. Urban areas almost always generate more wealth for government than they get back in services. (This is particularly interesting because a state’s propensity to vote for the “small government” Republican party is inversely proportional to the federal largesse it receives.)
For instance, in 1999, Illinois was the second largest “donor” state to Washington in dollar terms and the fourth largest in per-capita terms. Almost all of the wealth in Illinois is in the metro area, and again, much of that is generated just by downtown businesses.
Furthermore, anger over property taxes is usually fundamentally misplaced — people look past the “Cook County Treasurer” and assume it’s still the city’s fault. Property taxes only account for 15% of city revenue. Property taxes go to pay for city pensions (42%) and to pay back bonds (58%), not for general government. General government is paid out of an assortment of taxes: sales, income, utilities, “miscellaneous.” Most of your property tax bill goes to the school and park districts or to the county, not to city government.
As a result, complaints about city corruption are often interwoven into complaints about taxes. The continuing hired truck scandal shows that we still have a long way in getting true accountability and transparency from city government — much less Cook County government or Illinois or the feds or even corporations. More efficiency and better responsiveness is something all organizations should be striving for, and something that we deserve as citizens. But good government or bad, there genuinely is a fiscal crisis going on everywhere, and there has been ever since the Nixon era. Governments at all levels in the U.S. and elsewhere are having to make tough decisions about where to spend their money right now, and Chicago is no exception. (Nor are other governments — say, in Washington or New York or Paris — exempt from charges of corruption, nepotism, or malfeasance.)
Chicagoans are used to dealing with one level of government — the city — for everything. Maybe it’s conditioning under the ward system, or maybe it’s because the city takes credit for anything and everything (and therefore sets itself up to take the blame as well). But government goes much, much further than just City Hall: not only what you pay in taxes but also what you get back are determined more by what goes on in Springfield or Washington, or even by the county — and, by extension, the rest of the metro area (suburbanites free-load all sorts of services paid for by city dwellers), more so than by City Hall.
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