Chicago property owners pay higher taxes and fees than residents in any other city in the state. A new report by the Illinois Policy Institute says there are no signs of this changing any time soon. The Institute believes Chicagoans have yet to feel the full impact of governments' recent attempts to tax their way out of financial problems.
City Tax Hikes
The City of Chicago enacted numerous tax increases over the past two years to help fund the overburdened pension system.
A record $700 million in tax hikes were approved in 2015, including:
A property tax hike of $318 million that will rise to a total of $543 million a year by 2018 that is earmarked for previously unfunded police and fire pension funds
An additional $45 million in property taxes to pay for public school capital projects
$13 million in higher building permit fees
There were also new garbage collection fees, higher taxi fees, and higher fees on e-cigarettes.
Public School Tax Hikes
Public schools are dealing with their own financial crises. Chicago Public Schools increased property taxes by $250 million in 2016 to pay for teachers' pensions.
Property taxes will continue to go up for businesses and homeowners to cover the school district's borrowing debt.
County Tax Hikes
Cook County has raised a number of taxes recently. For example, a $16 million tax on hotels pushed the combined hotel tax burden in Chicago to 17.4%. This is among the top five highest rates in the nation.
Other tax increases include a new $74 million sweetened beverage sales tax that takes effect in July, higher overall sales taxes, an amusement tax on ticket-reselling websites, and new fees on e-cigarettes.
State Tax Hikes
Chicagoans may also have to deal with future tax hikes from the state. The unresolved state "grand bargain" budget threatens to hit Illinoisans with billions in new tax hikes.
Illinois lawmakers have been locked in a two-year budget stalemate, which has contributed to the state's economic problems. During the impasse, the state has racked up $13.4 billion in bills owed to businesses and service providers.
Need for Reform
There is general agreement that Chicagoans don't need more taxes. They need governmental accounting and spending reforms.
The Illinois Policy Institute report states, "Politicians at both the state and local level think it's easier to pass the bill on to taxpayers than to actually tackle the reforms necessary to fix the fundamental problems in government."
To read the full report, click here.