A healthy business tax base is vital to Cook County’s survival – Chicago Tribune
More than 50 years ago, Cook County government officials decided that commercial and industrial ratepayers should subsidize property taxes paid by homeowners. To make this happen, Cook County now assesses commercial and industrial taxpayers 2.5 times more than residential taxpayers and gives residential owners over $10 billion in exemptions that commercial and industrial taxpayers pay.
Because of this, commercial and industrial taxpayers pay almost three times more property taxes than everyone else (residential included), and their taxes are said to be the second highest in the country.
In recent years, a popular but misleading narrative has emerged, often repeated in the press, editorials and political campaigns. He paints commercial taxpayers as the bad guys in property tax history because they hire lawyers to file tax lawsuits seeking relief from crippling property taxes.
Commercial and industrial taxpayers are not the only ones filing tax appeals. More than 200,000 appeals are filed by residential taxpayers every year as they demand fair assessments and fair tax bills.
Companies have a simple mission: to survive, to prosper and to provide a return to their investors and jobs to their employees. If they fail in this mission, they wither and die. In the aftermath, the economy is suffering from a wave of business departures, foreclosures and vacant homes, and workers are suffering. Business failures and departures are universally bad for Cook County.
Just read the newspapers to see what is happening today. More than 25% of commercial space on Michigan Avenue is vacant. Water Tower Place has been returned to its lender – someone will have to figure out how to reinvent it. The commercial real estate market in the southern suburbs has collapsed. And Boeing is leaving Chicago for greener pastures.
So who’s the bad guy in Cook County’s property tax meltdown? High public spending and high property taxes. Their growth has far exceeded inflation over the past 20 years and has made Cook County property taxes a permanent second mortgage that no one can avoid.
According to Cook County Treasurer Maria Pappas, property taxes have doubled in the past 20 years. In comparison, inflation only increased by 36%. This means property tax growth has outpaced inflation by a staggering 3 to 1 margin.
Excessive government spending – and unaffordable property taxes – are the problem, not commercial taxpayers trying to reduce their tax burden so they can survive.
The constant attacks on the business world only make matters worse. For commercial taxpayers and investors, the scuttlebutt tells them that Cook County is a hostile place for them. And, when they pick up newspapers and watch television, they observe a steady stream of hostile attacks that portray them as villains. This negative environment reaffirms their perception that they could be better off elsewhere.
So what happens when businesses and investors avoid or leave Cook County? Core Economy: Demand for commercial real estate drops, leading to lower property values. To make matters worse, physical commercial property values are already suffering as people work from home, shop from home and entertain from home. The combination of these factors significantly affects the value of commercial properties.
What happens when commercial real estate values fall? Property taxes paid by commercial landlords go down, and the subsidy they pay to landlords goes down as well. Once this happens, residential property taxes automatically increase to compensate.
So, like it or not, residential property owners need a strong business tax base to limit their property taxes. The two do not oppose each other. Their destinies are inexorably linked.
It’s time to address the underlying problem of high local government spending and taxes.
In the meantime, we must stop attacking commercial and industrial taxpayers. They’re not bad guys. They pay almost triple their share of taxes. We need to encourage them to come to Cook County, not drive them away.
Remember: we are all in the same boat.
Michael Elliott is an attorney who helps homeowners with their property taxes.
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