Chicago’s tax rates on homes undercut the suburbs, report says

Lower effective rates apply in areas with a richer tax base, Civic Federation report shows.

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View on Chicago’s downtown northbound from the 16th floor of the IIT Tower

Effective property tax rates for homes in Chicago continue to be among the lowest for communities in northeast Illinois, the Civic Federation reports.

Victor Hilitski/For the Sun-Times

Effective property tax rates for homes in Chicago, calculated as a percentage of their market value, continue to be among the lowest for communities in northeast Illinois, according to a report issued Monday by the nonpartisan Civic Federation.

The group said among 12 selected Cook County communities, Chicago in 2017 had the lowest average effective tax rate for homes at 1.74%. Its report found that Harvey had the highest rate, 7.08%.

On its face, the finding could be seen as cover for Mayor Lori Lightfoot as she considers a property tax increase to help her wrestle with a projected $838 million budget deficit for next year. But that’s unlikely to mean much to Chicago homeowners who have seen steady increases in their tax bills and are bracing for more.

The federation’s report, however, documents a continued pattern that favors Chicago over communities that are largely poor or with a declining tax base. With a large source of commercial and industrial property plus many expensive homes, local governments in Chicago don’t need high tax rates.

Poorer towns must levy taxes on cheaper homes and fewer business properties, resulting in higher rates. The effective tax rate for homes in Chicago Heights was 5.01%, the report found, while two wealthy northern suburbs, Glenview and Barrington, had rates of 1.99% and 2%, respectively. The Glenview and Barrington homes are likely to have tax bills that are more expensive, but the bills that come due in poorer communities can take a bigger bite from incomes.

Reviewing the change in rates from 2008 to 2017, Harvey and Chicago Heights had the largest increases of more than 67% percent each, the federation said. It found Chicago’s effective rate for that period rose 32.48% while Oak Park had the smallest increase of the towns surveyed, 8.55%.

The report also analyzed trends for selected municipalities in the collar counties of DuPage, Kane, Lake, Will and McHenry. Among them, Waukegan had the highest 2017 effective property tax rate at 3.73% and Oak Brook had the lowest rate at 1.03%.

The federation looked at valuations of commercial and industrial property across the suburbs and noted a similar pattern, with higher tax rates in those areas with the lowest valuations.

The report uses data from county clerks and from the Illinois Department of Revenue, which each year calculates an equalization factor applied to properties countywide to ensure they are assessed at a third of market value.

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