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Chicago’s tax rates on homes undercut the suburbs, report says

Lower effective rates apply in areas with a richer tax base, Civic Federation report shows.

View on Chicago’s downtown northbound from the 16th floor of the IIT TowerEffective property tax rates for homes in Chicago continue to be among the lowest for communities in northeast Illinois, the Civic Federation reports.Victor Hilitski/For the Sun-Times

Effective property tax rates for homes in Chicago, calculated as a percentage of their market value, continue to be among the lowest for communities in northeast Illinois, according to a report issued Monday by the nonpartisan Civic Federation.

The group said among 12 selected Cook County communities, Chicago in 2017 had the lowest average effective tax rate for homes at 1.74%. Its report found that Harvey had the highest rate, 7.08%.

On its face, the finding could be seen as cover for Mayor Lori Lightfoot as she considers a property tax increase to help her wrestle with a projected $838 million budget deficit for next year. But that’s unlikely to mean much to Chicago homeowners who have seen steady increases in their tax bills and are bracing for more.

The federation’s report, however, documents a continued pattern that favors Chicago over communities that are largely poor or with a declining tax base. With a large source of commercial and industrial property plus many expensive homes, local governments in Chicago don’t need high tax rates.

Poorer towns must levy taxes on cheaper homes and fewer business properties, resulting in higher rates. The effective tax rate for homes in Chicago Heights was 5.01%, the report found, while two wealthy northern suburbs, Glenview and Barrington, had rates of 1.99% and 2%, respectively. The Glenview and Barrington homes are likely to have tax bills that are more expensive, but the bills that come due in poorer communities can take a bigger bite from incomes.

Reviewing the change in rates from 2008 to 2017, Harvey and Chicago Heights had the largest increases of more than 67% percent each, the federation said. It found Chicago’s effective rate for that period rose 32.48% while Oak Park had the smallest increase of the towns surveyed, 8.55%.

The report also analyzed trends for selected municipalities in the collar counties of DuPage, Kane, Lake, Will and McHenry. Among them, Waukegan had the highest 2017 effective property tax rate at 3.73% and Oak Brook had the lowest rate at 1.03%.

The federation looked at valuations of commercial and industrial property across the suburbs and noted a similar pattern, with higher tax rates in those areas with the lowest valuations.

The report uses data from county clerks and from the Illinois Department of Revenue, which each year calculates an equalization factor applied to properties countywide to ensure they are assessed at a third of market value.

Township Government

Considerations To Dissolve Local Townships Underway

Effingham, IL / Effingham Radio


Illinois -(Effingham Radio)- Illinois’ property tax task force will share its recommendations to reduce Illinois’ sky-high property taxes in less than a month. Cutting Illinois’ nation-leading number of government units should be in its crosshairs.

Consider: If Illinois did away with townships, a homeowner paying $6,000 in property taxes could save as much as $210 on his or her property tax bill.

Illinois is home to nearly 7,000 units of local government, more than any other state in the nation and twice as much government per person as the nation’s average. Townships are one example of government units that have largely outlived their purpose. Illinois has more than 1,400 townships, which cost taxpayers outside of Cook County $574 million – or 3.5% of all downstate property tax collections – per year to deliver simple public services that cities or counties could just as easily deliver.

Illinoisans pay for each layer of local government – cities, school districts, park districts, mosquito abatement districts and others – through their property taxes. With such a large number of government bodies to fund, it’s no wonder the average Illinois homeowner pays the highest effective property tax rate among large states and second-highest property taxes in the nation.

Many local government units in Illinois wastefully perform overlapping functions, and others provide services that could be more efficiently delivered by a larger government unit. Texas, a state with more than twice as many residents and five times the amount of land as Illinois, has almost 2,000 fewer layers of local bureaucracy than the Prairie State.

Consolidation is already happening and is cutting back on waste. For example, the city of Evanston and the now defunct Evanston Township shared the exact same borders. In 2014, voters agreed to dissolve the township, and the city assumed the township’s responsibilities that year. Evanston saved nearly $800,000 in the first year following the dissolution, in addition to seeing improvement in services.

In the spirit of other recent consolidation reforms, state lawmakers should make it easier for local taxpayers to trim layers of local government at the ballot box.

Adam Schuster
Director of Budget & Tax Research

Illinois ranked as the least tax-friendly state in America

Illinois is the least tax-friendly state in America

Published: Oct 2, 2019 6:02 a.m.

Illinois is the least-friendly tax state in the nation, according to a new analysis by Kiplinger’s

This week, personal finance site Kiplinger’s released its list of the most — and least — tax-friendly states in America. To determine this, it used a hypothetical couple with two kids and $150,000 in income a year plus $10,000 in dividend income, and then looked at their income, property and sales tax burden.

Illinois took the No. 1 spot on the list, thanks in large part to their very high property taxes. That was followed by Connecticut and New York, both of which have pretty high income taxes.

The 10 least tax-friendly states:
1. Illinois
2. Connecticut
3. New York
4. Wisconsin
5. New Jersey
6. Nebraska
7. Pennsylvania
8. Ohio
9. Iowa
10. Kansas

Meanwhile, the most tax-friendly states (in order) were Wyoming, Nevada and Tennessee. The first two don’t have income tax; Tennessee has income tax but it only applies to interest and dividends and doesn’t apply to salaries and wages.

The 10 most tax-friendly states:
1. Wyoming
2. Nevada
3. Tennessee
4. Florida
5. Alaska
6. Washington
7. South Dakota
8. North Dakota
9. Arizona
10. New Hampshire

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