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Property Tax Appeals Attorney Mike Elliott Research

VIEWS: 61 PAGES: 7

Illinois House Research supporting HB0664, which was used to increase the property taxes for everyone who bought homes in 2005, 2006, and 2007.

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									Problern$ lvith Renewing &

hxpa nnrnEf
The 7a/a Assessment Cap
Michael J. Elliott

T H T F U N N AMHNT AL PRCBLEM
WITH THf 7a/oCAP
TheTa/o was supposed Iirnit tax increases a time cap to in of skyrocketing home appreciation. Instead,it rut taxesfor most qualifying homeowners while raising taxestor: , Honreowners property experiencing modesl appreciation,
. 52o/o residential property owners (Chicago,2003), of , TOAo/o renters. and of . 1000/o conimercial and industrial propefty owners, clf

TheTo/o provided cap nrorereliefthan taxpayers askerj l'orand is an examoleof averkill.

THT PROBLTMS IVITH TXPANSION
Raising the $20,000cap rnakes ffie fwndamr.n*al pro$fem *xpsnsnf,iat {y wors€:
. Ownersof high value homes will receivemuch larger tax cuts than ownersaf madest homes ($1,000 vs. $3,000 in Chicagoand $7,600 to $4,BAAin suburbs). , All other property ownersl including awners of modestflow value homes, will foot the bill.

R ai s i ng c ap is lik e lyt o m a k et h is la w the permanenf,.

7o1o= TAX CUTS FOR MOST HOMEOWNERS

ANtr rAX rr"tKff''s fOR OVER. 52o/o0F
RESIDENTIAL PROPERTYCI}VNERS
For example, in 20Og in Chicago:

w Any honreowner whoseexemption was lessthan the cap experienced 5,4o/oTAX CUT despitea a $20,000 medianassessment increase 34o/o. of &ccording to the JG'PArepart, aver 52Va af Ck{caEa residential parcels paid more in 2AA3 as a r'€s{rtt...

2

TAX C{.'TTLLUSTRATIOSI
Tax Change $20kcap 20a2|d 2a03
90,00c 135,00C 185,00C
12.la/o

-5.4%
-5.4%

22.4% 20.4%
21.7"/o 12.6Ya
9. V"/o

-5^,+%
-5.4%

250,00c
345,00C

450,00c 600,00c

5.3%

-4.8% 0.4% 4.5%

,Assumes.' 32Yoas$essrrlent incrcasefrom '02 to'03 .,.Others hacl to paiy mor€ to subsidize these tax c$ts.

Wl-lY DOES THF 79/ofrAP CAUSETAX CUTS?

w .Sirnp/e met l; If a lronre'staxable property value increasesby 7D/o and the tax rate falls by more than 7olo (taxes rates in Chicagofeel almost I?-o/a 2003), taxes in witl fall.

VYa x UNHQU,AL, LJfdF,AlRFOR,SOl".,TFl SUHURSS
u Radically dlfferenf rafes of praperty appreciation and radically differefit praperty values made the distribution of benefits of th.e To/oass€ssment cap unequal and unfair.
Slnce property values appreciBtemore slowly in the SouLhsutrurbs, the 7% assessmentcap is of tnuch less value to South suburban honre owners. . But, becauseSouth Suburban Lax rates are high and real estate values low, the tax shift to lhe losers was more pronounced. .. Since property values in the Scluthernsuburbs did not increaseas rapidly as in Chicagoor the Northern suburbs, the South sr.rburbs subsidizedthe tax breaks given to owners of raplcJly appreciating honles in Clricagoand the North suburbs (with regard to County:wide tax districts). cap appears to have caused SeveralSouth suburban schoOls " The 7o/o to have received less state aid. This Dhenomenadid not occur in ChicaOo the Nortlr subl:rbs. or :

IMPACT 0F $601000: Wl{O \ff3NS? WhlO

Lo(}sEs?

WINNERS s most affluent horneowners . Raising the cap ta $60,000 will give large tax cuts of up b $4,840 tu the wealthiest homeawners, prirnarily in the North subLtrbsand wealthy areas of Chicago. . Impact of being under the cap? Tax Cut is guaranteed. LOOSERS = poorer property ornrners . Raising the cap to $60,0A0 daes nothing for modest homeowners who receive less than a $2A,000 homeowner exentption. , Their tax savings from the 70/o ass€ssment cap will be paftially eaten up by increased tax rates.

T

/l

$ds6f$ vAd"{/tr ed#eftrs

If4PACT'0r $60,000 : ?AX C{JflSfr'#$?

s0,00( 120,600/fZS16'
rB0,900 22.0"k I | 85,00( 247,90C 20.o"k 250,00t 33s.000 21.70k 345,000 462,30C\72.6"rW 450,00c 603.000 5. 9% 600,00c 804,000 5.3"'/"
135,00C

-5..1"1,
:-i.ti'}i

-2.$% 'i.6,,\
";:.61',c J.39ii'

-5,iqi
-r1.ti': o

0.4?'o
rI.50k

-7.I;qi,

@

front'02to'03 increase Assumes; 329d assessntenl

BIGGER XMPIICT'(}F $60,000 ; HVEFN Yp,K Sg-tgF'r"
.,jr:ni.irrrr.r,,!;rs 2yri:)!tr.a*,r:r!i:#:j{{1cs$i'wrr;a*1i*rLs*:tr:;ffirr*1a1iti4i}t$:11&asilii!ejffi

er Because a $60,00O limit would significantly increase the number and amount of tax cuts' the fax shiff to other taxpayers would be rnagnt-f,ied, ll iAll the original7o/o losers would continue to pay much more...
. Seniors (frozen assa-s.5rnents, paying higher tax rates) but - Aoartment owners and renters and conntercial properties - 8tr-siness . Residentialproperty owners who do not receive a honeowner exemptrcn , Haneawners nthose hornes are depreciating in value or annually... appreciating less than 7o/o

o Additional looser would include those who receive less than a $2o,OOOhomeowner exemption.
. Ov;nersof low and mid-value homes.

5

w IMPACT Or $?Sf&oCIl $MALLERTAX CUTS& CONTROLLED TAX TruCREASHS Ascording to the Givic Federation, renewal of the 7% cap with a $20,A00limit would cau* median tax increasesfo be as follows: Chicago NorthSuburbs SouthSuburbs
1A.60%

0.20% ,-f"##%

IMPACT Or $zc,O00 ; SMAI-LER TAX CLIT'S CONTROLLED TAX TNCREASES &
Tax C hanqe ca'P $25 cap lri'i$60

MarketValu6-

2oo3l

%of $20kcar 2oo€ H omes 2003
"it.4% ,5.49i)
"5.4;ti'
15.4sri'

2006
.7"!i:il

90,00t 120,600 12.5V" 135,00C180,90022.0% 1 8 5 ,0 0 0 247,90C 20.07" 250,00( 335,00( 21.7% 34s.00t 462.30C 12.6"/" 450,00( 603,00c s.9% 600,00c 804,00c 5.3Vo

,+.,+lt
7,8"/"

"fj.{lo7; -6.9}i,

-2,6?;
-2.ii%

-3.0%

.t!.{i% -2.6% -3,.3% -2.1":a

""i.8r1,!

0"4Y"

4s%

15,6% 20,4/" 18.4% 16,8%

8.4%
18.9% 15.4"/L

15.1%

xMpAcT0p sp5,8s& SMALKHR. TAX C{JTS Aruru CSruTffiS M T&X

rrufrm.rAsfrs

CP LffiGISLATIVffi TICNS
&
ffi

& &t

D on'trenew . w R enew i th $20 , 0 0 0c a p , Renew witlr $60,000cqp. Renewwilh a cap betwpen 2 0 , 0 0 0a n d $ $60,000, Renewbut pfiase fJre c;lp clapwn astd cpzuf,

B


								
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