Housing affordability remains a pressing issue in Chicagoland. As a commissioner for the Cook County Board of Review, I am acutely aware of the financial burden property taxes impose on families. Recent findings by the Institute on Taxation and Economic Policy (ITEP) highlight the role property tax “circuit breakers” can play in alleviating this burden.
Circuit breakers ensure that property taxes do not consume an unreasonable portion of household incomes, thereby promoting housing affordability and economic stability for our most vulnerable residents.
The problem with our current system is that property taxes often require lower-income families to pay a larger share of their income than affluent families. According to the Illinois Economic Policy Institute, Illinois has the eighth most unfair property tax system. ITEP says it ranks eighth for heaviest reliance on property taxes.
As we saw in this year’s reassessment in the south suburbs, property assessments tend to be skewed against lower-income homeowners and people of color, leading to over-assessments and higher tax bills. This year, heavily African American areas like Calumet, Thornton and Rich townships saw their residential assessments increase by at least 50%, while areas like Oak Park saw increases of 33%.
Circuit breaker programs provide targeted property tax relief based on a household’s income. When property taxes exceed a certain percentage of a taxpayer’s income, the circuit breaker mechanism reduces the tax liability, much like an electrical circuit breaker prevents overload.
In West Virginia, for example, property taxes that exceed 4% of income can be credited back to eligible taxpayers, but cannot exceed $1,000. Maine’s threshold is 6%. Utah’s program provided a credit of $1,186 to people with income below $13,044 in 2023.
This year, the median Park Forest homeowner saw their tax bill grow from $4,585 to $7,152, a 56% increase. The median homeowner in the south suburbs saw their tax bill increase by 19.9%, to $6,117. A circuit breaker program could have rebated some or all of the difference to those who couldn’t afford to pay.
ITEP’s research shows that circuit breakers are the most effective tool available to promote property tax affordability. They are particularly effective when their benefits are substantial, eligibility criteria are inclusive and residents are well-informed about the program. Currently, 29 states and Washington, D.C. offer some form of property tax circuit breaker.
An overlooked aspect of property taxes is their impact on renters. Property taxes on rental properties are typically passed on to tenants through higher rents. Therefore, extending circuit breaker benefits to renters as Michigan, Minnesota and Wisconsin do (or focusing benefits on them as Oregon does) is crucial, especially for people of color who are more likely to rent due to historical and ongoing discrimination. More than two-thirds of states with circuit breakers include provisions for renters, recognizing that affordable housing policies must consider all residents, not just homeowners.
In Illinois, we can draw lessons from successful programs in other states. By adopting best practices and ensuring our programs are inclusive of all residents, we can significantly improve property tax fairness and housing affordability. Minnesota uses its circuit breaker refunds to turn its regressive property tax system into one that is moderately progressive. Unlike Illinois, Michigan and Minnesota target income-based assistance to non-seniors in addition to seniors.
It is imperative that we address the regressive nature of property taxes. Implementing property tax circuit breakers is a practical and effective solution to protect families from financial hardship and promote housing stability. By doing so, we can ensure that all residents, regardless of their income or housing status, have access to affordable and secure housing. It is time for policymakers to prioritize these vital programs and safeguard the economic well-being of our communities.
George Cardenas is the 1st District commissioner of the Cook County Board of Review. He represents Chicago’s Southwest and Northwest sides as well as suburban Cook County.
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