CHICAGO | Economic & Business Development

[Handro]

Originally Posted by moorhosj

or Illinois having the largest tax burden in the country. Neither of those statements are true.

Yes, that was a curious claim. I wonder by which metric they are coming to that conclusion.

[moorhosj]

Originally Posted by Handro

Yes, that was a curious claim. I wonder by which metric they are coming to that conclusion.

They are using a WalletHub analysis. I've looked at these before and they are very surface-level. They don't take into account things like how Iowa has a sales tax on services and Illinois doesn't or how retirement income isn't tax in Illinois. They typically don't adjust for differences in state income levels, cost-of-living or property values.

[glowrock]

Originally Posted by moorhosj

They are using a WalletHub analysis. I've looked at these before and they are very surface-level. They don't take into account things like how Iowa has a sales tax on services and Illinois doesn't or how retirement income isn't tax in Illinois. They typically don't adjust for differences in state income levels, cost-of-living or property values.

Any so-called "journalist" or "analyst" using WalletHub as their main information source should be thrown to the lions to be eaten as a light snack. Seriously? It's worse than using the National Enquirer or even The Onion as a news source!

Aaron (Glowrock)

[moorhosj]

Originally Posted by glowrock

Any so-called "journalist" or "analyst" using WalletHub as their main information source should be thrown to the lions to be eaten as a light snack. Seriously? It's worse than using the National Enquirer or even The Onion as a news source!

Aaron (Glowrock)

Sure, if your target is accuracy. If you have other motivations, it is a perfectly cromulent source.

[marothisu]

Originally Posted by moorhosj

They are using a WalletHub analysis. I've looked at these before and they are very surface-level. They don't take into account things like how Iowa has a sales tax on services and Illinois doesn't or how retirement income isn't tax in Illinois. They typically don't adjust for differences in state income levels, cost-of-living or property values.

Who the hell would use WalletHub for their analysis? If they are serious, they'd pull from something more reputable. That's just laughable, and anybody who sees that and buys into it is nothing short of a fool. I knew Illinois Policy Institute has an agenda like so many, but that's just a new low. I'll be sure to steer clear of their analysis from now on if that's how they do things. That's just as bad as a clickbait article - I'd laugh, but it's so sad that it's not funny.

Illinois has a pretty high property tax rate (not the highest though) and sales tax rate for things that aren't groceries, OTC drugs, etc.. but the income tax rate is moderate which essentially balances out the higher property taxes. Interestingly, when we were in Chicago this weekend, we'd met a few people who asked us about COL in NYC including taxes. They were shocked to find out that my income taxes are double what they were in Chicago, and my rent is double (and would be more if living in comparable in Manhattan) while sales tax is not much below Chicago. Then even more shocked when I tell them that the property taxes in suburbs in New Jersey is way worse than the city of Chicago. I've seen this before too with my own friends - so many people are ignorant to these facts. I think people in and around Chicago automatically think they have it the worst and just love to complain while being woefully ignorant to some other places. Once they see the tax rates and housing prices in places like NYC, LA, San Francisco, etc they realize how lucky they are in Chicago. I've noticed it more after leaving Chicago - so many people in the area seem seriously ignorant and just assume Chicago is the worst at literally everything. The people we had just met where these conversations took place basically stopped complaining once I told them how things are in other places. Not saying Chicago is the lowest, but compared to other comparable urban centers like NYC and SF, Chicago is much better in terms of taxation and COL all around.

[SIGSEGV]

They're even cherrypicking walethub "studies." https://wallethub.com/edu/t/states-w...-burden/20494/ claims that Illinois has the 9th highest tax burden (which is also not necessarily a useful measure since it discounts cost of living).

[the urban politician]

Originally Posted by marothisu

Who the hell would use WalletHub for their analysis? If they are serious, they'd pull from something more reputable. That's just laughable, and anybody who sees that and buys into it is nothing short of a fool. I knew Illinois Policy Institute has an agenda like so many, but that's just a new low. I'll be sure to steer clear of their analysis from now on if that's how they do things. That's just as bad as a clickbait article - I'd laugh, but it's so sad that it's not funny.

Illinois has a pretty high property tax rate (not the highest though) and sales tax rate for things that aren't groceries, OTC drugs, etc.. but the income tax rate is moderate which essentially balances out the higher property taxes. Interestingly, when we were in Chicago this weekend, we'd met a few people who asked us about COL in NYC including taxes. They were shocked to find out that my income taxes are double what they were in Chicago, and my rent is double (and would be more if living in comparable in Manhattan) while sales tax is not much below Chicago. Then even more shocked when I tell them that the property taxes in suburbs in New Jersey is way worse than the city of Chicago. I've seen this before too with my own friends - so many people are ignorant to these facts. I think people in and around Chicago automatically think they have it the worst and just love to complain while being woefully ignorant to some other places. Once they see the tax rates and housing prices in places like NYC, LA, San Francisco, etc they realize how lucky they are in Chicago. I've noticed it more after leaving Chicago - so many people in the area seem seriously ignorant and just assume Chicago is the worst at literally everything. The people we had just met where these conversations took place basically stopped complaining once I told them how things are in other places. Not saying Chicago is the lowest, but compared to other comparable urban centers like NYC and SF, Chicago is much better in terms of taxation and COL all around.

Sorry bud, but our income tax is about to go up, and property taxes are going to be headed up and up.

I love your little “I was talking to a New Yorker and he said wow Chicago is awesome” anecdotes but with this one there is a legit issue.

It’s not just that our taxes are just going to go up.

It’s that even after that, the constitutionally protected pension windfall is so gargantuan that everybody knows that they will be going up and up and up indefinitely. Let’s not forget the new garbage collection fees and water/sewer taxes added to water bills just a few years ago that out of towners don’t know about.

That’s what many people don’t understand. Savvy investors realize that our ridiculous unfunded pension obligation coupled with zero political will to change means that recent tax increases are merely the tip of a long and huge iceberg. That’s why our credit rating is junk, home values are the worst in the country, etc.

But all of this keeps the rents high because people rightfully don’t want to buy a house here, and yes Chicago is an awesome and great city, etc etc.

[Kenmore]

Originally Posted by marothisu

Who the hell would use WalletHub for their analysis? If they are serious, they'd pull from something more reputable. That's just laughable, and anybody who sees that and buys into it is nothing short of a fool. I knew Illinois Policy Institute has an agenda like so many, but that's just a new low. I'll be sure to steer clear of their analysis from now on if that's how they do things. That's just as bad as a clickbait article - I'd laugh, but it's so sad that it's not funny.

Illinois has a pretty high property tax rate (not the highest though) and sales tax rate for things that aren't groceries, OTC drugs, etc.. but the income tax rate is moderate which essentially balances out the higher property taxes. Interestingly, when we were in Chicago this weekend, we'd met a few people who asked us about COL in NYC including taxes. They were shocked to find out that my income taxes are double what they were in Chicago, and my rent is double (and would be more if living in comparable in Manhattan) while sales tax is not much below Chicago. Then even more shocked when I tell them that the property taxes in suburbs in New Jersey is way worse than the city of Chicago. I've seen this before too with my own friends - so many people are ignorant to these facts. I think people in and around Chicago automatically think they have it the worst and just love to complain while being woefully ignorant to some other places. Once they see the tax rates and housing prices in places like NYC, LA, San Francisco, etc they realize how lucky they are in Chicago. I've noticed it more after leaving Chicago - so many people in the area seem seriously ignorant and just assume Chicago is the worst at literally everything. The people we had just met where these conversations took place basically stopped complaining once I told them how things are in other places. Not saying Chicago is the lowest, but compared to other comparable urban centers like NYC and SF, Chicago is much better in terms of taxation and COL all around.

The Illinois Policy Institute is a far right think tank with an obvious agenda, the only people that take them seriously are boomers sharing faceboom memes

[Bonsai Tree]

Originally Posted by the urban politician

Sorry bud, but our income tax is about to go up, and property taxes are going to be headed up and up.

I love your little “I was talking to a New Yorker and he said wow Chicago is awesome” anecdotes but with this one there is a legit issue.

It’s not just that our taxes are just going to go up.

It’s that even after that, the constitutionally protected pension windfall is so gargantuan that everybody knows that they will be going up and up and up indefinitely. Let’s not forget the new garbage collection fees and water/sewer taxes added to water bills just a few years ago that out of towners don’t know about.

That’s what many people don’t understand. Savvy investors realize that our ridiculous unfunded pension obligation coupled with zero political will to change means that recent tax increases are merely the tip of a long and huge iceberg. That’s why our credit rating is junk, home values are the worst in the country, etc.

But all of this keeps the rents high because people rightfully don’t want to buy a house here, and yes Chicago is an awesome and great city, etc etc.

I wouldn't paint a blanket statement on home prices across Chicago, certainly overall they've had trouble recovering from the recession, but to say that investing in a house in the Chicagoland area (like you've been saying) is a bad investment is very much a broad generalization. I would say it depends on where you live. I'm sorry if your Libertyville home has lost value, but maybe that reflects broader trends in the housing market. For instance, in many suburban town, the real estate prices near town centers have been skyrocketing. I live only 1.5 miles from my town center, and yet the value of my house has plummeted. Meanwhile, if you have a house within 1/2 mile of the town center, the value of your house has probably doubled in the last 5 years (no exaggeration here). Might it be possible that some housing has lost value because of much broader trends (like towards transit and good schools)? And I fully agree that we have an enormous pension and property value problem, but to say such apocalyptic things is ignoring other factors.

[the urban politician]

Originally Posted by Bonsai Tree

I wouldn't paint a blanket statement on home prices across Chicago, certainly overall they've had trouble recovering from the recession, but to say that investing in a house in the Chicagoland area (like you've been saying) is a bad investment is very much a broad generalization. I would say it depends on where you live. I'm sorry if your Libertyville home has lost value, but maybe that reflects broader trends in the housing market. For instance, in many suburban town, the real estate prices near town centers have been skyrocketing. I live only 1.5 miles from my town center, and yet the value of my house has plummeted. Meanwhile, if you have a house within 1/2 mile of the town center, the value of your house has probably doubled in the last 5 years (no exaggeration here). Might it be possible that some housing has lost value because of much broader trends (like towards transit and good schools)? And I fully agree that we have an enormous pension and property value problem, but to say such apocalyptic things is ignoring other factors.

It hasn't affected me--based on comps of recent sales from my neighbors my Libertyville house has actually done well. Not amazingly well, but it's certainly gained value. I bought during a low period of the market (early 2010's), plus I never made the mistake of buying a huge, $1 MM+ home, and I'm near downtown/Metra and in an outstanding school district. I made a great buy, actually--the dumb move would've been to get tempted and buy some $1.2 MM 5000 sf monster. Lots of professionals do that and they pay the price, at least if you live in Chicagoland.

The people who I feel bad for are the ones who bought huge homes in the late 90's or early 2000s. Their homes never recovered their original value. They went in thinking they were making a great move, but ultimately Chicagoland just let them down. If it were California, NY, Seattle, etc etc their homes would probably be worth double or triple what it was when they had first bought them.

[moorhosj]

Originally Posted by the urban politician

Sorry bud, but our income tax is about to go up, and property taxes are going to be headed up and up.

Let's ignore your assumption that everyone's income tax will go up because it isn't based on any known facts, available information implies the opposite is true. The second part is where you prove marothisu's point about people's ignorance. Property taxes are implemented at the local level and voted on by local residents. I hear this similar sentiment from people in DuPage County, where citizens have continually voted to increase taxes and send the money to schools, then turn around and complain about high the property taxes.

The second piece of this you are ignoring is that taxes also rise in fast-growing places. You need to pay for the new roads, new police stations, new fire stations and new schools somehow. Let's take the Iowa City area as an example because I had family move there from Chicago in the past 5 years.

Enrollment at the Clear Creek Amana district has more than doubled since 2002 when it had 1,249 students. District officials anticipate growing another 200 students a year for each of the next five years, Kuehl said.

Clear Creek Amana district residents approved two general obligation bond votes in the last six years, for $48 million in 2014 and $36 million in 2017. These funded projects such as a new elementary school, additional parking for the middle-school and high-school, a new elementary school gymnasium, an addition to the Clear Creek High School and other renovations.

Now that area has loaded themselves with debt that has to get paid somehow. Take a guess on how they pay for it.



The doom-and-gloom not only gets old, but isn't based on facts. If the pensions become un-payable, we could always tax retirement income, raising $2 billion annually and fill most of the hole. Or we could expand the sales tax to cover the same things Iowa's does and revenue would increase by $3 billion annually which alone would solve the pension problem.

That’s what many people don’t understand. Savvy investors realize that our ridiculous unfunded pension obligation coupled with zero political will to change means that recent tax increases are merely the tip of a long and huge iceberg. That’s why our credit rating is junk, home values are the worst in the country, etc.

This must be why savvy investors refuse to build in Chicago. Surely nobody would invest in a Lincoln Yards or The 78 type developments. It's probably why I can't find any active projects on the Chicago Projects & Construction page. /s

[moorhosj]

Originally Posted by the urban politician

The people who I feel bad for are the ones who bought huge homes in the late 90's or early 2000s.

This sentence is a microcosm of your entire political philosophy.

You don't feel bad for people who were arrested for drug crimes and blackballed from productive society thereafter, because you're saving those tears for the people who bought McMansions 20 years ago and didn't see a large return.

[LouisVanDerWright]

Originally Posted by the urban politician

Sorry bud, but our income tax is about to go up, and property taxes are going to be headed up and up.

I love your little “I was talking to a New Yorker and he said wow Chicago is awesome” anecdotes but with this one there is a legit issue.

It’s not just that our taxes are just going to go up.

It’s that even after that, the constitutionally protected pension windfall is so gargantuan that everybody knows that they will be going up and up and up indefinitely. Let’s not forget the new garbage collection fees and water/sewer taxes added to water bills just a few years ago that out of towners don’t know about.

That’s what many people don’t understand. Savvy investors realize that our ridiculous unfunded pension obligation coupled with zero political will to change means that recent tax increases are merely the tip of a long and huge iceberg. That’s why our credit rating is junk, home values are the worst in the country, etc.

But all of this keeps the rents high because people rightfully don’t want to buy a house here, and yes Chicago is an awesome and great city, etc etc.

I've had this conversation with dozens of Chicago RE naysayers before. Real estate is inherently a low-information marketplace. Each property is different and so is each market and sub market. Further complicating things is the fact that most data on real estate sales and values isn't public.

One thing that is unquestionably public is data on the fiscal health of state and local governments. So if you believe markets function reasonably efficiently given all available information, the worst case scenario for Chicago and Illinois is already priced in. The one bit of information about our markets that isn't private or difficult to define or poorly understood is the fiscal mess Chicago and Illinois are facing.

Therefore prices will likely never be lower for RE in Chicago and Illinois because it's pretty difficult for the crisis to get worse without outright insolvency triggering a bankruptcy and wholesale destruction of public debts or, on the other hand, a true reform of the system improving finances and also alleviating the fiscal threat. In any eventuality, long run investments in Chicago and Illinois real estate will be rewarded because things can't really get any worse than they are now.

[Kenmore]

Originally Posted by moorhosj

This sentence is a microcosm of your entire political philosophy.

You don't feel bad for people who were arrested for drug crimes and blackballed from productive society thereafter, because you're saving those tears for the people who bought McMansions 20 years ago and didn't see a large return.

[the urban politician]

Originally Posted by moorhosj

This sentence is a microcosm of your entire political philosophy.

You don't feel bad for people who were arrested for drug crimes and blackballed from productive society thereafter, because you're saving those tears for the people who bought McMansions 20 years ago and didn't see a large return.

not relevant to this thread

[the urban politician]

Originally Posted by moorhosj

Let's ignore your assumption that everyone's income tax will go up because it isn't based on any known facts, available information implies the opposite is true. The second part is where you prove marothisu's point about people's ignorance. Property taxes are implemented at the local level and voted on by local residents. I hear this similar sentiment from people in DuPage County, where citizens have continually voted to increase taxes and send the money to schools, then turn around and complain about high the property taxes.

The second piece of this you are ignoring is that taxes also rise in fast-growing places. You need to pay for the new roads, new police stations, new fire stations and new schools somehow. Let's take the Iowa City area as an example because I had family move there from Chicago in the past 5 years.





Now that area has loaded themselves with debt that has to get paid somehow. Take a guess on how they pay for it.



The doom-and-gloom not only gets old, but isn't based on facts. If the pensions become un-payable, we could always tax retirement income, raising $2 billion annually and fill most of the hole. Or we could expand the sales tax to cover the same things Iowa's does and revenue would increase by $3 billion annually which alone would solve the pension problem.



This must be why savvy investors refuse to build in Chicago. Surely nobody would invest in a Lincoln Yards or The 78 type developments. It's probably why I can't find any active projects on the Chicago Projects & Construction page. /s

^ Not sure what your angle is, but I'm getting weary of your strawman approach to everything I say. Nothing you're writing here fundamentally refutes the issues I've brought up. I never said taxes don't go up elsewhere. I really can't get my head around what you're trying to prove to me?

What I'm saying is that while fast growing places are seeing taxes rise to pay for infrastructure, Illinois' problem is that our taxes--every type of them--are headed up just to pay for previous pension obligations that we've failed to pay into. Money in a hole--a hole that is growing.

I'm sorry, but nothing you wasted all the time posting changes any of that. Until we stop this balloon from expanding, there will simply be more taxes laid upon more taxes, and nothing to show for it except for retirees living in Arizona enjoying our money.

The doom-and-gloom not only gets old, but isn't based on facts. If the pensions become un-payable, we could always tax retirement income, raising $2 billion annually and fill most of the hole. Or we could expand the sales tax to cover the same things Iowa's does and revenue would increase by $3 billion annually which alone would solve the pension problem.

Exactly proves my point. The solution is always about more, new, or higher taxes to fill a growing hole. The largest pension hole in the nation.

Flabbergasted that you can somehow paint this as anything less than a crisis......

[the urban politician]

Real estate investors see safe harbor in New York, LA but wary of Chicago: survey
A number of international investors said they see NYC as the “most stable and secure” global city
https://therealdeal.com/chicago/2019...hicago-survey/

It's naive to brush off these concerns as "needless gloom and doom". Sometimes the doom and gloom is actually based on real problems.

(a) $133 Billion in unfunded pension debt.
(b) Aging infrastructure that badly needs the money, but because of (a), funds get diverted from this
(c) A stagnant or declining population. Thus (a) falls on fever and fewer people
(d) Yes, you can raise taxes, but they are already fairly high and rising, and how will that then impact (c)?
(e) Yes tons of skyscrapers and midrise apartment buildings, etc are getting built. I love that. But I'm betting that if we were unfettered by the above issues, we could be seeing a lot more, particularly in areas that aren't seeing much investment. Look at the rest of the region and other sectors. Tourism and the apartment sector is hot, but why is it hot? How long will that hold everything stable in light of (a), (b), (c), and (d)?

I don't claim to have the answers, but the above state of affairs locally is among the worst in the US. I'm not saying other regions don't have problems, but I do think it's disingenuous to cast if off as just "right wing rhetoric".

[Bonsai Tree]

Yeah, why should I feel bad for the people in McMansions who made a bad investment? They could have made a better investment, but they chose the quick and easy way out. McMansions are unsustainable and moreover unpopular nowadays, so don't tell me the McMansions should be selling out. People have realized that they just aren't worth it anymore, and that's the real reason their prices have plummeted. They are in the middle of nowhere, not near transit, usually have shotty construction, and are just ugly. I have no sympathy for people who have made that poor of an investment.

[the urban politician]

Originally Posted by Bonsai Tree

Yeah, why should I feel bad for the people in McMansions who made a bad investment? They could have made a better investment, but they chose the quick and easy way out. McMansions are unsustainable and moreover unpopular nowadays, so don't tell me the McMansions should be selling out. People have realized that they just aren't worth it anymore, and that's the real reason their prices have plummeted. They are in the middle of nowhere, not near transit, usually have shotty construction, and are just ugly. I have no sympathy for people who have made that poor of an investment.

I think the 'urbanist' in you is correct, but you are missing a larger point.

It's not an issue of "feeling sorry" for anybody. It's not like I care about those people either.

What matters is, McMansions in Chicagoland are performing more poorly than McMansions in 99 other major American metros. So large numbers of people in our region, comparative to pretty much the rest of America who made similarly bone-headed investments, are losing wealth (or not gaining it). That is never a good thing for a regional economy, especially in light of our growing pension balloon and tax liability (see my post above).

[moorhosj]

Originally Posted by the urban politician

^ Not sure why you have such an axe to grind with me, but nothing you're writing here refutes what I've said.

I have nothing against you, I just want to balance some of your claims that I find questionable. Maybe the problem is that you view everything from the lens of trying to grind an axe or win an argument. Maybe it is in how I deliver my thoughts. I have agreed with you many times on this board and will continue to do so. When I don't agree, I will comment from my perspective. That's how message boards work.

Originally Posted by the urban politician

I never said taxes don't go up elsewhere. What exactly is your angle? I really can't get my head around what you're trying to prove to me?

It is the unsaid part of every comment about taxes in Illinois. Only looking at one side of the equation (Illinois) isn't a strong basis for decision making. If I say I am leaving Illinois because taxes are "too high", then it absolutely matters what taxes are like where I move. I have seen this play out with friends moving to Georgia, Iowa and North Carolina only to find higher taxes than they anticipated. I find this type of argument common (not necessarily from you), and wanted to counter it with a real-world example.

Originally Posted by the urban politician

What I'm saying is that while fast growing places are seeing taxes rise to pay for infrastructure, Illinois' problem is that our taxes--every type of them--are headed up just to pay for previous pension obligations that we've failed to pay into. Money in a hole--a hole that is growing.

I completely agree with this statement.

Originally Posted by the urban politician

Exactly proves my point. The solution is always about more, new, or higher taxes to fill a growing hole. The largest pension hole in the nation.

Flabbergasted that you can somehow paint this as anything less than a crisis......

I haven't seen one credible way to get out of the pension hole without more revenue. If you have an idea, the folks in Springfield would love to see it. Rauner had 4 years to present an idea and gave us nothing.

That said, why can't it be about the RIGHT taxes? If we eliminate the retirement income exemption and fill the pension hole, I think you could argue that it is fixing an unbalanced system as opposed to "more, new, or higher taxes". In reality it is increasing taxes, but technically it is just eliminating a questionable exemption.