Quote:
Originally Posted by marothisu
I mean it obviously gets worse the higher the price. I'm not as worried about home sales as I am about commercial real estate. A $50M sale of an office building from what I understand would be $1,471,000 in transfer taxes vs. the current $375,000 for the buyer. It is an increase of nearly $1.1M, or about 2.2% of the total sale price ontop of it, extra. That may not be an issue for buildings that have great occupancy percentages (yes, they do exist especially apartment buildings), but orgs/companies trying to offload some more troubled properties (i.e. office buildings with too high of vacancy rate with no good progress since the pandemic) may have more trouble finding buyers now. Which could put their property in even more trouble. Even the ones that will overcome this and sell will probably see lease/rent rates go up to make up for it.
That's really what concerns me, not a buyer paying an extra $100K and change for a $5M home (may still dissuade some buyers for sure but the impact on CRE I think is a bit worse).
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I think if the city NEEDS more money to invest in ways that increase Chicago's productivity, growth and broadly shared long term prosperity then this sort of tax may not be a bad way to do it.
My concern is the vague, potentially harmful, way that these funds may be used. "For the homeless" isn't really encouraging. Would the money be spent in naïve, well-intentioned ways that makes the homeless problem worse? Perhaps by providing amenities or services that encourage the homeless to come to Chicago? Would the policies do good things but perhaps very inefficiently? If we reduced the homeless numbers but in a way that cost $2,000 per month for each person helped, then the net effect of this tax would almost certainly be negative.