Posted on 05/14/2018 11:28:59 AM PDT by doug from upland
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.
Just as the mortgage tax deduction raised the value of real estate, this tax increase will lower the value of real estate.
They are siphoning off a big chunk of the population’s equity in their homes, and hoping that voters never realize that their pockets have been picked.
Lets impose a tax on all property owners to bail out the f***ed up govt pensions because they payout 80-100% of salary at retirement.
Virginia does something similar. They just call it “Personal Property Tax” and proceed to molest their citizens.
If I remember correctly Illinois made the mistake of making the state pensions part of their State Constitution and every attempt in court has thus been lost when trying to adjust them in any way.
If I’m correct in that memory the only way they can address it would be through a constitutional modification.
Section 5 here:
http://www.ilga.gov/commission/lrb/con13.htm
Odd... I was thinking of lamp posts and rope.
Unless the state constitution prohibits it, and some do.
Only defense I can think of, and I hate to say it, is buy the least expensive home you can stand to live in if you’re fortunate to have a choice.
Problem solved.
Your home is an ATM for city/state government so every town clerk, road worker & paper-pusher become millionaires. The town manager where I live makes almost 300k. His pension will be 80% of that figure.
So, if your house is worth $250,000, and never went up in price, it will cost you an extra $75,000 to fund someone else’s pension. That sounds really fair....
I thought PPT were local taxes.
The Pensions are un-renegotiable. They are wholly irrevocable. They are etched into constitutional stone.
Even Math doesn’t stand a chance. They will be paid. By Taxpayers.
Yes, given the corrupt pols and union bosses are long gone so suing them for damages won't happen.
Planning my escape to Indiana. Should have happened earlier to be honest. They push, they push and they push... let this corrupt state go bankrupt. Too bad because I loved my neighbors and my neighborhood but this is downright thievery via government if it ever becomes policy.
Every county in the Commonwealth has PPT.
Last one to leave Illinois turn out the lights.
It may be a bad and won’t happen,but it may get the voters to realize how bad the problem is.
Illinois is a very good example as to why our forefathers came up with the electoral college.
Or a lawsuit that ultimately makes its way to the Supreme Court?
Yeah but I don’t think it kicks back to Richmond. The pension is partially paid by the employee. We kick in 5%.
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