Category: Chicagoland

Extra help for idlers, from Jim Houlihan

New data shows, once again in 2007, that Cook County Assessor Jim Houlihan doesn’t think our tax laws give enough subsidy to land speculators, so he’s doing something extra to underassess vacant land.

By law and ordinance, he is supposed to put assessments at a specific proportion of what he estimates the actual value of real estate to be. These ratios have been adjusted over the years, and documentation is sparse, but for 2007 it appears that parcels containing single family or apartment buildings up to six units are to be assessed at 16% of value, and vacant land at 22%.

Annually, the Illinois Department of Revenue calculates the ratio between value assessed by Mr. Houlihan’s staff, and actual sales prices. The results for 2007(pdf)? Residential 8.34%, vacant 7.81%. (Not quite as bad as some previous years, however.)

The County is not ignoring this problem. Since the Assessor seems unable to assess vacant land at a higher percentage of value than land people use, they have changed the assessment policy so that, beginning wtih 2009, both residential and vacant land are to be assessed at 10% of value. We shall see how this proceeds.

Remember the Laffer Curve?

As a result of high taxes on cigarettes, UIC economist David Merriman estimates that “75 percent of cigarettes smoked in Chicago come from packs that don’t bear city tax stamps.”  Many, of course, also lack county and state stamps. And according to the Tribune.

In 2006, city revenues from cigarette taxes came in at a little less than $32 million. By 2008, they had declined to about $25 million. This year, they’re projected to drop again.

What Sam Zell knows

Several times each year I give a little talk at HGS about “What the Rich Know.”  And I always point out that the richest man in Chicago, Sam Zell, got that way not so much from smart investments in real estate and other monopolies, but more because he is extremely clever in taking advantage of income tax laws and regulations.  (And that’s why increasing tax rates on high incomes doesn’t really bother the rich much, nor does it raise much revenue, except for tax lawyers.)

We see another example today, with a Sun-Times report that tax expert Robert Willens suggests that IRS will eventually examine the (pending) “sale” of the Cubs, which has been structured to avoid $300 million in capital gains tax that would otherwise be due.

Update Sept 27 2009: Kevin Horrigan suggests that, if Zell doesn’t want to pay the tax, America’s taxpayers should be entitled to a share in the team.

For those who say government can’t run anything right, I say, compared to what? Not winning a World Series for 101 years?

Thanks to Al Katzenberger of Public Revenue Education Council/ Common Ground USA for the tip.

Medallion Prices– upward trend continues

Month                Price               Source

July ’09            $175,000         Chicago Dispatcher
May ‘09             $170,000       Chicago Dispatcher
April ‘09            $164,500        Chicago Dispatcher
March ‘09           $165,000        Chicago Dispatcher
February ‘09      $158,000        Chicago Dispatcher
Feb ‘07               $  77,000        Chicago Tribune
2004                   >$40,000       Chicago Tribune
1991                     $28,000         Chicago Sun Times

August 25th is the most recent date for which sales are reported on the Chicago City web site. Three of four sales that day were at $184,000.

Cook County changes classified assessment rates

Who knew? Not me, but I don’t pay as much attention as I should.  Effective with the “2009 tax year” Cook County is moving toward just two assessment classes: 10% and 25%.  That means that residential and vacant are now supposed to be assessed the same, which is probably good since Assessor Houlihan just couldn’t seem to accept that, under the old system, vacant was supposed to be assessed at a higher percentage of value than owner occupied 1-6 unit residential.  This change will reduce some tax bills and raise others, but total revenue is likely unaffected due to the multiplier which the Illinois Department of Revenue will calculate.

I can’t find any mention of this in the daily newspapers, although separately there seems to be a project to reassess all parcels in the county, instead of just the 1/3 done in a normal year.  (Is this legal? Probably it doesn’t matter.) See Break for suburban homes? – ‘This is not a gimmick,’ Houlihan says, but taxes could still increase Chicago Sun Times May 12 ’09.

Just  in case anybody thinks they understand how assessments work.

Where Chicago posts medallion sales prices

I have been relying on the estimable Chicago Dispatcher monthly newspaper for Chicago medallion sales prices, because I could never find them on the City’s web site.  Now, while trying to figure out something else, I have found the site.   The same page with a different url seems to be here.  It’s not clear whether this link is permanent, but one can navigate to it from  egov.cityofchicago.org using  Your Government > City Departments > Business Affairs and Licensing > Public Vehicles > Taxi and Limo Industry >  Medallion Owners. The latest list posted, thru June 8, is this pdf, showing that on the last date reported, June 9, ten sales closed at prices ranging from $165,000 to $178,000.

Other medallion-related items: Here’s a post indicating that New York, too, is seeing continuing rise in medallion prices.   And Taxi Medallion Systems do not Benefit Drivers.

Chicago medallions rise again.

According to the June issue of Chicago Dispatcher, taxi medallion prices rose again in May, to an average of $170,000.  Here’s some context:

Month                Price               Source
May ’09             $170,000       Chicago Dispatcher
April ’09            $164,500        Chicago Dispatcher
March ’09           $165,000        Chicago Dispatcher
February ’09      $158,000        Chicago Dispatcher
Feb ’07               $  77,000        Chicago Tribune
2004                   >$40,000       Chicago Tribune
1991                     $28,000         Chicago Sun Times

(Chicago Dispatcher data are for the period ending on the 23rd of the indicated month).

I find it remarkable that this kind of real estate has continued to gain value, over 7% in 3 months, while most other kinds in Chicago seem to have declined.  There was, however, considerable fluctuation recently, with sales in late April running around $145,000, increasing to $175,000 on May 19 and 20. According to ads in the Dispatcher, you can lease your medallion out for $600 to $700 per month, a yield of close to 5% (in addition to any price appreciation which might occur).  There is, of course, some risk that the price might depreciate instead.

Solution for governments’ budget woes

With governments at all levels in fiscal distress, I just want to describe a solution which would be effective, would save money for most taxpayers, and would encourage productive enterprise.  Georgists will already be familiar with everything below. Continue reading Solution for governments’ budget woes