Dupage Policy Journal

DuPage County residents, like others in Illinois, pay some of the highest property taxes in the country. Governor J.B. Pritzker has proposed a progressive income tax that would first raise rates on the top earners in the state – those who make $250,000 or more.

Pritzker touts the progressive income tax as filling a budget hole, and suggests it will lower taxes, but it doesn’t offer a plan for that, or explain how the funds will be used to lower property taxes. He also does not give a guarantee that only the wealthiest Illinois residents will be targeted by this tax increase, past the initial phase of the rollout.

In 2017, Cook County put into effect a tax on soft drinks sold in stores and in restaurants, and that four-month tax saw a decrease in the amount of sodas sold in the county. Twenty one percent fewer, when analysts took into account residents leaving the county to buy their soft drinks and avoid the tax. People bought less in Cook County because it cost more.

Pritzker’s progressive income tax is not like Cook County’s soda tax, which was written and imposed partly with the aim of discouraging residents from drinking sugary sodas, whether they were in restaurants or buying them in grocery stores.

There are big issues with Pritzker’s proposed progressive tax: the funds from this increase likely wouldn’t pay to improve the services in the state, and the top earners in the state, the ones he proposes to target with the initial property tax rate, are the Illinois residents who are most likely to leave.

In April 2019, Illinois Policy reported that property taxes in DuPage County rose 40-percent faster than inflation between 1996 and 2016. Those increases went to pay for pensions. In that article, Illinois Policy wrote that DuPage County taxpayers see 86 cents of every $1 taxed for municipal police go to pensions, and 59 cents of every $1 taxed for fire services go to pensions. Growing pension obligations crowd out services and tie the hands of local governments during the budget process.

Not only does the Illinois Policy column reveal that the state has some of the highest property taxes in the country, but there’s another issue: home prices are not growing quickly. In fact, home prices grew just 1.9% from the third quarter of 2018 to the third quarter of 2019, according to data released by the Federal Housing Finance Agency.

Pritzker’s plan doesn’t guarantee lower property taxes, and raising taxes on the wealthy tends to make them want to leave the state. California and New York have both seen this happen in recent years.

In 2018, New York saw a larger number of their wealthy residents leave after Gov. Andrew Cuomo raised their property taxes. Stanford University researchers revealed that wealthy California residents were 40% more likely to leave after a 2012 progressive tax increase.

The other wrinkle in this proposed tax increase is that Pritzker won’t say that the progressive tax program wouldn’t raise property taxes on residents who make less than $250,000, after the initial rate increase, according to an interview with a Chicago TV station in April 2019.

This type of tax won’t work because it’s not designed to change behavior, unlike Cook County’s soda tax.