<<< back < prevnext >

Tax Rates Spiraling Upward



Article:
We are all aware of the extraordinarily high property tax rates that exist in the south suburbs. What is not as well-known is how rapidly the property tax rates have been increasing in parts of Cook County. Over the past four years property tax rates have been increasing at rates vastly exceeding the Consumer Price Index. The rate of inflations is reported in the Consumer Price Index (CPI) as follows:

2010

2.7%

2011

1.5%

2012

1.7%

2013

1.5%


Average annual compounded CPI growth rate: 1.85%. 

The following methodology was followed to estimate tax growth. In this example we used the tax code 72001 which is in Chicago.

Chicago - Tax Code 72001

EQUALIZATION

TAX RATE

EQUALIZED RATE

ANNUAL INCREASE

YEAR

FACTOR

2009

3.3701

4.627

15.59

2010

3.3000

4.931

16.27

4.4%

2011

2.9706

5.455

16.2

0.0%

2012

2.8056

6.396

17.94

10.7%

2013

2.6621

6.832

18.19

1.4%


Compounded Average Growth Rate 4.0%. 

A 4% compounded growth rate in taxes vastly exceeds the inflation rate. Chicago, however, shows much more modest growth in tax rates than many of the south and west suburban communities.

Community

2009/2013      Tax Rate

Average Compound Growth Rate

Homewood

10.585/16.397

5.4%

Chicago Heights

11.477/19.006

7.0%

Glenwood

10.527/17.123

6.6%

South Chicago Heights

8.767/13.438

4.9%

Orland Park

8.334/12.390

4.1%

Melrose Park

7.452/11.783

5.8%

Franklin Park

8.639/13.237

4.9%

Hickory Hills

8.063/12.311

4.8%

Oak Forest

9.582/14.388

4.4%

South Holland

10.977/18.585

7.6%

Lansing

11.062/16.914

4.9%

Brookfield

8.767/12.372

2.8%



The data above was based upon just one tax code for a community although each community might have several different tax rates in different sections for the city.

Real estate tax rates cannot grow at many multiples of inflation for long without severely hurting property values. Real estate taxes already constitute the largest single expense for most real estate. Illinois already has some of the highest property tax rates in the country. For a real estate market to remain viable there must be an expectation that the property will either go up in value or at least maintain value at its current level. Escalating property taxes could create a death spiral for many communities where property values drop and tax rates continue to increase in order to support city services.