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When it comes to property taxes, Democrats can spell relief — but that’s about it

House Democrats moved to smooth the way for a new state graduated income tax by advancing a pair of proposals ostensibly aimed at local property tax bills. 

State Rep. Daniel Didech, D-Buffalo Grove, and state Rep. Rita Mayfield, D-Waukegan
State Rep. Daniel Didech, D-Buffalo Grove, and state Rep. Rita Mayfield, D-Waukegan, discuss their bill that would create a property tax relief fund before a House committee in Springfield.
Screen image.

SPRINGFIELD — Illinois legislators would love to lower your property taxes.

Honest.

After all, they take plenty of heat from constituents about the size of their property tax bills even though the state doesn’t receive the revenue from property taxes, which are exclusively collected and spent by local governments.

But count me skeptical any time lawmakers start promising to actually do something about it.

That was the case again Tuesday when House Democrats moved to smooth the way for a new state graduated income tax by advancing a pair of proposals ostensibly aimed at local property tax bills.

A day earlier, the House had agreed to put a constitutional amendment before Illinois voters in 2020 to switch away from the state’s flat-rate income tax, something I totally support.

Left undone was the necessary companion legislation setting forth what the new rates will be. A measure already approved by the Senate would increase taxes only for those taxpayers earning more than $250,000 a year (including joint filing couples).

I’m pretty sure the House will follow suit in the next few days, which is important because the constitutional amendment won’t stand a chance if opponents are allowed to make up lies about what it would do. There’s enough of that already.

But some House Democrats seem to be squeamish, likely worried about the political implications of voting for an income tax increase that doesn’t provide real property tax relief — long a goal of graduated income tax proponents.

With that in mind, a House committee Tuesday endorsed creation of a Property Tax Relief Fund that would be used to pay rebates from the state to anyone claiming a homestead exemption. The rebate would show up as a line item on the tax bills sent out by county treasurers.

Sounds great, right?

Except they didn’t identify any source of revenue to pay for the rebates, specify the amount of the rebates or what the total cost to the state would be. In other words, they did nothing.

The legislative sponsors — Rep. Rita Mayfield of Waukegan and Rep. Daniel Didech of Buffalo Grove — said those questions will be answered by a Property Tax Relief Task Force, to be created as part of the income tax rate legislation.

I probably don’t even need to tell you how lame it is to create a task force to study something that’s been studied to death.

Here’s the problem with the state providing property tax relief. There are only a few ways to do it.

The state can pay for the relief itself, taking money from some state taxpaying pot to send it back to property taxpayers directly — as it does now with the property tax credit already allowed on state income tax returns.

Or it can try to reduce property taxes through some form of limitation on the amount of money local governments raise through property taxes or on the rates they charge. That’s been tried, too, through so-called tax “caps.”

The problem with the first method is that it can be “insanely expensive”— as one influential lawmaker puts it — for the state to pay for property tax relief. Any substantial property tax reduction would pretty much wipe out the gains Democrats hope to obtain from a graduated income tax.

As it is, Gov. J.B. Pritzker’s “Fair Tax” plan, as approved by the Senate, includes a modest 20 percent increase in the aforementioned property tax credit on your income tax bill, raising it to 6% from the current 5%.

The problem with tax limitations is that local governments — schools topping the list — have their own bills to pay and don’t take kindly to the state hampering their most important source of revenue.

In the future, everyone hopes a graduated income tax will help hold down property taxes because the state will be better positioned to meet its obligation to fund schools. But there are no guarantees.

“We constantly get the question,” said Rep. Mayfield, “What is the state doing to lower our property taxes?”

Honest answer: not much.