Last month I used Illinois Department of Revenue data to blog about the Cook County Assessor’s failure to properly value vacant land. Our good buddies at the Civic Federation took that data a couple of steps further to estimate the effective tax rates (pdf) paid by homeowners in a dozen suburban Cook County communities. The effective tax rate is the percentage of actual property value that is paid in taxes. And, no surprise, the rates in Chicago Heights and Harvey are more than double the rates in Glenview and Barrington.
This discrepancy isn’t due to any inherent problem with the real estate tax, but may have something to do with the fragmentation of taxing units, particularly school districts. Areas with relatively little taxable real estate need to collect a greater percentage of its value than do areas with a larger tax base, other things being equal. But there’s no reason we couldn’t have an equalization system under which the strong-tax-base communities share revenue with the others, as has been done since 1971 in Minnesota.
It is said that lower-income neighborhoods have a greater share of their real estate value in improvements rather than land, in which case exemption of improvements from the tax would also tend to equalize the burden.