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.
Presto!
Your house is now assessed at $10,000,000.
See how easy that was?
Now cough up your fair share.
If I'd had brains when I was younger, I would have stayed and would probably be retired by now.
That got me laughing!!!
Let’s do some simple math. If you earn $1,000 a month rent on a $250,000 house your return is 4.8%. An extra expense of $2,500 means the value of house has to drop over $52,000 in order for you to earn 4.8% on your money. (($9,500/.048).
It doesn’t have to drop this much because there is a FIT tax benefit but the decrease is pretty significant.
A $500,000 home would be worth a lot more with a 3% tax rate than a 5% tax rate.
The only solution is to renegotiate pensions
I strongly disagree, all it would take is 1 AG with balls to declare the Contracts Null and Void due to Fraud, then release enough evidence to demonstrate that every last public official supposedly negotiating on the Taxpayers behalf was accepting Campaign Contributions and Bribe money from the very people they were negotiating against, demonstrate using third grade math that these fraudulent contracts can NEVER be fulfilled, they are a Mathematical Impossibility, CONFESS and throw yourself on the Mercy of the Court.
They have to change the state constitution. It will take a revolution to do that. The time is coming and it will be glorious.
I nominate you as our lead negotiator lol.
Try the Islamic solution.
Map out EVERY Govt worker.
Burn their cars.
Try the Islamic solution.
Map out EVERY Govt worker.
Burn their cars.
Let’s do some simple math. If you earn $1,000 a month rent on a $250,000 house your return is 4.8%. An extra expense of $2,500 means the value of house has to drop over $52,000 in order for you to earn 4.8% on your money. (($9,500/.048).
It doesn’t have to drop this much because there is a FIT tax benefit but the decrease is pretty significant.
A $500,000 home would be worth a lot more with a 3% tax rate than a 5% tax rate.
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What is a FIT tax benefit? Do you mean Federal Income Tax Benefit?
If so and if this assessment were to be allowed in the deductible amount, isn’t there now a $10,000 limit in property tax deductions of Fed Inc. Tax?
I would guess that a $500,000 house would already exceed that $10,000 limit in local property taxes.
Sorry, the FIT benefit is the deductibility of the property taxes, Good point on the $10,000 limit. I am not anywhere near that level so hadn’t thought of it. The various caps on tax laws make it so complex to figure things out.
My main point was a 1.0% tax has a large impact on values
particularly in a low interest rate environment.
good point...just trying to understand the issue...amazing how complex things have gotten don’t you think?!
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