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.
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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.
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