By: Mark Glennon*
Greg Hinz at Crain’s is among the most influential political reporters in Illinois. His column yesterday is headlined, Want to soak the rich? Look at the property tax. It makes his case why the property tax is the best way to “bonk those big, bad companies” and hammer Bruce Rauner’s “business buddies.”
For progressives and conservatives alike, that should be the like mental waterboarding. Property taxes are regressive — the rich pay proportionately less. That’s such an important and basic policy fact that it should be taught in every high school. You won’t find a single economist of any stripe who says property taxes are progressive.
Just this year, the left-leaning Institute on Taxation and Economic Policy published a distributional analysis of the tax system in all 50 states. On the right are its conclusions about property taxes in Illinois. The rich get off easiest. One reason for that is that renters, too, pay property taxes. Most tax levied on apartments gets passed through to renters, which is also a universally accepted fact.
As for corporations, Mr. Hinz ignores another fundamental rule from Econ 101: Corporations don’t pay any taxes. They collect them, and the do not collect them progressively.
Well, it’s less regressive than the sales tax that Cook County wants to raise, argues Hinz. Doesn’t matter. It’s still regressive. It still worsens the relative position of poor versus rich.
As for the presumption that soaking the rich is prudent, Mr. Hinz doesn’t discuss that, apparently assuming we should take that for granted.
Hinz bolsters his case with the image on the left of some swanky homes, probably in Lincoln Park. He should have added a few like the one on the right, for sale in Harvey, a suburb in Cook County, for $28,000. The latest property taxes on it are $5,100 per year, as listed on Zillow.
Harvey’s effective average residential property rate is nine percent. That’s right, nine percent, and Harvey is not alone with have become confiscatory rates, as we wrote here.
Tell homeowners in those places that another increases in their property tax is a good way to soak the rich.
Income and wealth disparity is among the biggest challenges of our age. It won’t be fixed by populist demagoguery and blind indifference to economic facts.
*Mark Glennon is founder of WirePoints. Opinions expressed are his own.