Follow @csteditorialsThe worst thing about property taxes might be that they don’t take into account a person’s ability to pay. A family whose primary earner is laid off is expected to make a full property tax payment, even when the cookie jar is empty.
To protect against this, the Illinois Legislature over the years has carved out property tax breaks for certain financially vulnerable groups, such as the elderly and disabled military veterans, which is right and fair. Nobody wants to see older Americans, who often live on modest fixed incomes, forced out of their homes. So too, of course, for our honorable veterans.
But as investigative reporter Tim Novak laid out in Sunday’s Sun-Times, there are times when property tax exemptions — even for the elderly and disabled veterans — go too far, allowing homeowners who are quite comfortable or even wealthy to pay absolutely no property taxes — zero — while others in miserable circumstances must pay more. Property taxes are a zero-sum game. Every dollar not paid by one property owner must be paid by all other property owners.
Follow @csteditorialsAs Novak piles up the numbers and examples — such as a retired radiologist who pays nothing in property taxes for a condo located right on Lake Shore Drive — the unfairness becomes obvious. The Legislature should revise the rules so that only those who truly could use the break are helped. At a time when Mayor Rahm Emanuel is jacking up property taxes to rescue pensions for police and firefighters and teachers, every Chicago homeowner must feel confident that the system is fair and equitable.
Consider an exemption for disabled veterans that can drive property taxes right down to zero. Veterans who are at least 70 percent disabled, as certified by the U.S. Department of Veterans Affairs, are exempted from all property tax payments. Veterans who are 30 to 50 percent disabled are eligible for smaller exemptions.
This program, created by the Legislature and signed into law by Gov. Bruce Rauner last year, is laudable in concept. We’re proud to live in a state that looks out for its veterans. But it’s not good policy to extend that zero-tax exemption to even the wealthiest eligible veterans. Plenty of other folks are hurting more and would benefit more from the tax break.
A second exemption that can drive taxes down to zero is the senior assessment freeze, which discounts property taxes for senior citizens the longer they stay in their homes. Unlike the exemption for disabled veterans, the senior assessment freeze comes with an income cap; it’s available only to seniors earning less than $55,000 a year. But, again, it sometimes goes too far.
The aim of the senior assessment freeze and an accompanying senior citizen exemption is to keep senior citizens on fixed incomes from having to move because of ever-rising property taxes. It is a worthy goal. But the two programs go well beyond that, comforting the already comfortable. Meanwhile, there might be a family living in a house across the street — a hard-working and industrious family — that can barely cover its bills, but it cannot get such a generous property tax break.
The unfairness in the system is often pointed out by the respected Civic Federation, which opposes all exemptions that are granted even to homeowners who clearly have the ability to pay.
Property taxes are fundamentally regressive, making no allowance for who is flush and who is poor, for who owns three homes and who is barely hanging on to one. A better solution in the long run would be for Illinois to reduce its reliance on property taxes and move to more equitable alternatives, such as a progressive income tax or a sales tax that is broadened to include services.