Sticking It To Suburban Taxpayers
The Chicago Sun-Times had an article Monday about how property taxes are higher in most suburbs than in Chicago.
An accompanying chart showed all selected suburban homeowners (but those in Oak Brook) having a higher effective tax rate than Chicago homeowners. The lowest--Wilmette--was 13% higher, while the highest cited--Harvey--was 2 3/4th times higher.
That was not the point of the story, but that is what the figures tell me.
So, what are the “effective tax rates” that Reporter Abdon Pallasch writes about?
They are the only way I know to compare real estate tax burdens.
I found them at the Illinois Department of Revenue, but Pallasch cites a Civic Federation study.
“Effective tax rates” allow you to compare your tax burden to those of others.
To calculate your effective tax rate, divide your tax bill by what you could sell your property for.
Before you tell me that you do not know what your property is worth, let me suggest that you probably know more than you think.
But, if that is your excuse, go to Zillow.com. (I have compared it with a couple of homes in my neighborhood. On a couple it is pretty close, but I found one lake view home on which is off by at least 50%. Nevertheless, it is a start.)
So, if I take Zillow’s estimate on my home’s worth and divide that value into my tax bill, I get an effective tax rate of 1.9%.
In Chicago the average homeowner only pays 1.29% of the value of his home, as of last year’s tax bills.
That is up significantly from the 1.1% the Illinois Revenue Department found for Chicagoans five years before in 2000, but it in no way comes close to my McHenry County effective tax rate.
So, how does the Civil Federation figure that the effective tax rate
is actually going down?
I can understand the complaints of Chicagoans about higher tax bills. They are 25% higher than 5 years ago.
But their real estate tax bills are still low compared virtually all Cook County suburbanites and, certainly, those of collar county and Downstate homeowners.
This was, of course, posted on McHenry County Blog first, where the message of the day is--gasp--an anti-war button.
7 comments:
frank coconate is a better man
The problem isn't the tax rates, or even the monies asked by the local governments and agencies. The problem is the asinine assessments made by both Cook County and Springfield, neither of which appear to be tethered to anything approaching reality. I bought northwest-side house in March, so I'd say I have a pretty good idea of what it's market value is...and I can tell you with absolute certainty that both the county's assessed value and the value when adjusted by the state equalizer are both way, way off.
It doesn't help that Assessor Houlihan is trying to get the 7% cap reauthorized with disingenuous scare tactics: he and others know full well that tax rates are under local control so they can be adjusted back downward in the face of rising assessments. But the more convoluted the assessment system, the more opportunities there are for officials and property owners to play games and reshuffle the tax burden.
Fix the assessment system--both at the county and state level--so that it relies on realistic values rather than magic 8-balls, and then we'll have a better shot at ensuring that property owners pay no more, and no less, than their fair shares.
If the effective property tax rate is higher in the suburbs, then it seems to me that suburban homeowners would stand to benefit from school financing reform that shifts the burden of paying for schools from property taxes to income taxes -- in other words, from local financing to state financing.
Of course, this isn't true if the suburbs are paying higher tax rates to support more spending in their local schools. But if that's the case, then it's absolutely fair that effective tax rates should be higher.
The tether, my friends, is the public schools in town and country.
The pie chart on tax allocation is monstrous.
So, what are your effective tax rates, folks?
I think I have the answer to why suburban property taxes are higher, but I need to do some more research.
Okay, I appear to be a winner here -- City of Chicago, just under 1%. On the other hand, my assessment is the lowest on the block -- the house needs a lot of work! On the other hand, my assessment is going up by 35% in 2006.
Cal, when you consider why suburban rates are higher, keep in mind that Cook County residential taxes may be lower because commercial property in Cook is assessed (or is it levied) at a higher rate. In other words, in Cook County residential taxes are subsidized by higher business taxes.
You and I probably disagree whether it's a good thing -- I think it's perfectly fine to tax commercial at a higher rate -- but it definitely explains at least part, if not most, of the difference.
Consider yourself lucky at 35%, some people in LakeView or Lake Township are going up 90+% *on average* for certain types of homes.
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