Illinois residents have the highest property tax rate in the nation

Limiting how much units of government can raise taxes could provide much-needed relief for overtaxed Illinoisans.

Illinois residents have the highest property tax rate in the nation. Over the past 50 years, property taxes in Illinois have grown 2.5 times faster than inflation and 14 times faster than the state’s population. Since 1990, property taxes have grown 3.3 times faster than Illinoisans’ median household income. Illinois residents need a break. And a property-tax cap could protect Illinoisans from taxes growing faster than their paychecks year after year.

Indiana’s property tax cap: A model for Illinois

Indiana adopted its property tax cap law in 2008. The law limits how much property taxes can be raised on taxpayers, and requires the government to seek voter approval before raising revenues above the tax caps. In 2010, Indiana voters adopted the tax cap as an addition to their state constitution.

Tax limits

The reform puts three tax caps on the assessed value of property: a 1 percent cap on homestead property, a 2 percent cap on agricultural land and a 3 percent cap on commercial property. For example, if a taxpayer’s personal property is worth $100,000, then the amount of taxable money is capped at no more than $1,000.

Tax credits

If the tax levy in an area causes the property tax bill to be more than the cap allows, then the law requires a credit to be given back to the property taxpayer in the form of a tax deduction. This tax deduction is reduced from the local government’s share of the revenue.

Voter referendum required in order to raise taxes above cap

If a unit of government wants to collect more than what the tax cap allows, the constitutional amendment provides it may do so provided it receives permission from voters via a referendum to raise the tax caps for a certain amount of time.

How could Illinois benefit from a property-tax cap?

Both residents and business owners would benefit from the protection a property tax cap provides. In fact, it would provide similar benefits as a taxpayer bill of rights because it would restrict politicians from suddenly imposing higher property tax rates on residents. Taxpayers would not have to worry about their property taxes rising out of control, as they are now in Chicago. A cap would allow homeowners and businesses owners to plan with more certainty for their long-term tax liability.

The implications of a property-tax cap

Implementing property tax caps would restrict the amount of revenue a local unit of government could collect. Therefore, in order to allow local governments to operate without continually raising taxes, they need to have the power to control or reduce their operating costs. A good place to begin would be by reforming collective bargaining and workers’ compensation laws, which drive up the cost of government

Illinoisans need tax relief. Implementing a property tax cap would be a good step in the right direction.

TAGS: property taxes

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