Property taxes in Illinois keep going up, but homes themselves have yet to recover their value years after the housing crisis.
A new study found that Illinois homes purchased in 2008, right before the housing-market recession, still have not gained back their pre-recession value. In fact, Illinois is one of only seven states where this is the case. And one reason home values are struggling to increase is because of high property taxes. As property taxes increase, the cost of homeownership also increases, which means taxpayers are able to put less money toward paying for their homes, and homes don’t appreciate strongly. Sometimes high property taxes cause home values to go down because homebuyers do not want to pay a high price on a mortgage if the property taxes are also high. Illinois is taxing the value out of its homes.
This is bad news for Illinois homeowners paying some of the highest property taxes in the nation. Not only are high property taxes a heavy burden on taxpayers, but they also deter other potential homebuyers from buying property in Illinois. Because of this, many Illinois homeowners are struggling to sell their homes, and are stuck paying a high property tax bill in the meantime.
Many Illinoisans also cite high taxes as the reason they want to move out of the state. This is no surprise considering that – in addition to having the highest property taxes in the nation – property taxes in Illinois are also growing 3.3 times faster than median household incomes.
How to bring tax relief
Struggling home values are an example of why Illinoisans need protections from tax increases. Illinois taxpayers need both immediate and long-term tax relief. To achieve this, legislators need to immediately implement a property-tax freeze so property taxes do not continue to increase.
Legislators also need to implement a property-tax cap to limit how much property taxes can be raised on homeowners. A property-tax cap can prevent property taxes from increasing on individual homes or across an area. Also, if a unit of government wants to collect more money than the cap allows, then the government must first receive permission from voters via a referendum.
Legislators also need to implement a taxpayer bill of rights to restrict the government from introducing a new tax or raising existing tax rates. A taxpayer bill of rights, similar to Colorado’s constitutional amendment, would put a limit on how much revenue a government can collect each year by restricting revenue growth to a rate of population plus inflation. Similar to a property-tax cap, with a taxpayer bill of rights, a government also must seek voter approval if it would like to raise taxes above the limit or create a new tax. However, a taxpayer bill of rights applies to all taxes, not just property taxes.
The high-tax environment is hurting both taxpayers’ wallets directly, and also their home property values. Illinoisans will continue to be financially overwhelmed until steps are taken to bring crucial tax relief.