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Unlike the city’s budget, business budgets do not automatically increase each year. Increasing property tax bills mean costs go up and businesses have less money for expansion or new hires.
There’s a solution most Chicagoans support: A property tax freeze. In a recent poll of registered Chicago voters conducted by Echelon Insights in partnership with my organization, the Illinois Policy Institute, 69% of respondents polled in favor of a property tax freeze.
The new mayor should commit to freezing the city’s property tax levy. Both mayoral candidates have already committed to dropping Mayor Lori Lightfoot’s automatic property tax increase tied to inflation. A property tax freeze would go a step further.
Vallas supports a local property-tax cap for homeowners and businesses. He has not backed a citywide freeze.
“Both the city and the schools operate under a property tax levy cap. But having the levy cap does not help individual property taxpayers who are living in or have businesses in areas that are being gentrified, or are going through the reassessment cycle,” Vallas said.
Implementing both individual caps and a citywide freeze would be an even better solution, as it would stabilize residents’ now-fluctuating tax bills. More Chicago residents might be able to afford, and stay in, their homes and neighborhoods.
Brandon Johnson promises not to raise property taxes, but he wants to impose $800 million in other taxes. That includes taxes on airlines, hotels and a revived head tax on businesses.
He also plans to introduce “about a $1 or $2 tax per securities trading contract” such as sales of stocks and bonds. Johnson alleges the tax is small and could bring in $100 million in new tax revenue. In reality, the tax could decimate Chicago’s famous agricultural product trading center.
Tax hikes aren’t the kind of “predictability” job creators need.
Chicago’s business climate is unwelcoming. Property taxes are part of that, but there are other financial burdens politicians put on job creators.
Besides a property tax freeze, most of the Echelon poll’s respondents favored lowering taxes on businesses. Fifty-two percent of the pollsters said they want to lower business taxes, compared to 29% who thought, like Johnson, that they should be raised.
Property taxes fund most of the city’s budget, but they don’t exist in a vacuum. Because over 42% of the city’s budget goes to debt and pension costs, true property tax relief requires serious pension and budget reforms.
Fix property taxes, pensions and spending. Then you’ll have the kind of “predictability” that not only convinces people to stay, but draws new investment and residents to Chicago.
Bryce Hill is director of fiscal and economic research at Illinois Policy Institute, a nonpartisan research organization.
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