Regressivity and Cook County Property Taxes

I was listening to “The Morning Shift” on WBEZ this morning, and they started talking about property tax. Now, property tax isn’t really my thing, but the story caught my ear for a couple reasons.

First, of course, I’m a homeowner in Chicago, so the recent property tax hike is salient enough that it’s worth some of my time. Second, as my wife pointed out to me, the assessment of property values has an aspect that seems tremendously regressive and, therefore, problematic.

From my quick Google Scholar search, it looks like the question of whether property taxes are regressive or not is still widely disputed.[fn1] Given that I’m an interloper in the property tax area, and that this is a blog post, I’m not going to resolve the question of property tax regressivity here. (FWIW, though, it appears that in Illinois, at least, lower-income families pay a higher percentage of their income in property taxes than higher-income families.)

On the segment I listened to, the second guest was Tom Shaer, the Deputy Assessor for Communications in the Cook County Assessor’s Office. And, as he described the assessment process, he repeatedly emphasized the importance of homeowners’ appealing their assessments.

For example, at approximately 14:45, he said,

We use the appeals step as part of the overall assessment process to get us to the best figure, the fairest figure for your home.

Later, at 20:26, he said,

We want you to appeal, ’cause that helps us whittle [your assessment] down when appropriate.

I recognize the need for an appeals process in property tax assessments. As Mr. Shaer explained, the assessor’s office deals with tens of thousands (or more!) properties every three years. It doesn’t have time to spend with each property individually, so it certainly can make mistakes.

But I’m uncomfortable with the way the Cook County Assessor’s Office seems to view the appeals process. From his statements, it looks like they view it, not merely as an error-correction procedure, but as part of the process.

The problem with that? It seems likely that wealthier homeowners are more likely to file successful appeals. They are more likely to have the knowledge that appeals are an option. With more money at stake, they have a larger incentive to file an appeal. And they can afford to hire professionals to help them with the appeal.

Now Mr. Shaer emphasized that homeowners to not need an attorney to file these appeals. But attorneys who do this kind of work presumably are more familiar with how to successfully navigate the system than individual homeowners, who would only file an appeal once every three years at the absolute most. Moreover, most individual homeowners need to do their day jobs during the day, meaning they don’t have significant chunks of time they can devote to appealing their assessment.

As a result, whether or not the property tax is regressive (and again, in Illinois at least, it appears to have regressive tendencies), the assessment process strikes me as deeply regressive and deeply troubling.


[fn1] From what I can tell, there seem to be three main views. Traditionally, people have thought of property taxes as regressive. If they’re a tax on capital, though, and capital is owned primarily by the wealthy, then they may be progressive, if inefficient. And if they’re not really taxes, but fees for a bundle of local services, then, I suppose, they’re consumption, maybe?

3 thoughts on “Regressivity and Cook County Property Taxes

  1. Sam-

    When this happened in Kentucky, the appeal was basically going to be denied. The assessed value went way up on many homes and people were freaking out. Not mind you because the assessment was wrong (above their perceived market value of the home) but because they were paying a tax more accurately aligned with the property value.

    I agree with you that the majority of challengers will be people with wealth because they are not intimidated by the system. However, I am not sure how high that number will be because of the optics of such a challenge (it is an on-the-record statement that their property has a lower value).

    What is concerning is that the monumental tax raise shows how regressive the tax was. More expensive homes have been woefully undertaxed for a long period of time.

    It will be interesting to follow the story!

    Like

  2. Intriguing that Cook County actively encourages property tax appeals. I’m traveling and not at a computer, but I recall Andrew Hayashi’s salience paper as stating that in New York City, very few homeowners appeal their assessments. The point, as I recall, is that bundling the payments with mortgage payments makes the tax less salient. Here’s a link to his paper:
    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2151867

    Like

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