A new report says the Republican tax bill nearing passage in Congress could end up slicing 3 to 6 percent from home prices here in Evanston.
The study from Moody’s Analytics reported by Slate says that parts of New York and New Jersey will fare even worse with housing value declines of around 10 percent, and that some outer ring Chicago counties could see declines of 7 to 9 percent.
The damage is expected to be greatest in areas that have both high state income taxes and high home values, because the bill limits deductions for property taxes and state and local income taxes to a total of $10,000.
The pain may be ameliorated for owners of more modestly priced homes — because the bill also doubles that standard deduction — meaning many lower-income residents will be less likely to choose to itemize deductions in the first place.
Some observers believe the change will also make it harder for local governments to raise taxes in the future as higher-income residents respond politically to the shock of seeing their federal tax deductions reduced — leading to reductions in services.
It’s a tax cut for everyone!
First, the linked story is about ONE economist’s claim that the Republican tax cut would hurt homeowners. Nonsense. It might hurt wealthy homeowners because the property tax deduction under the proposed bill would be $10,000 and the mortgage deduction would go down to $500,000. That affects the wealthy owners not the poor or middle class ones.
Remember when Democrats overrode Republican Guv. Rauner’s tax hike veto and raised our income taxes from 3 to 5 percent? Well, under the Republican tax cut no longer can someone in a state with income taxes claim a deduction. The thinking is states that do NOT have an income tax should be not be subsidizing those that do. Makes sense to me.
Bottome line – Illinois Democrats no longer will have the federal goverment subsidizing their tax and spend ways. The Democrats will be beholden to the voters they enjoy taxing. Of course, the media is doing the Democratic party’s bidding by breathlessly claiming the tax cut bill would hurt middle class and low income folks and benefit only the wealthy.
The Republican bill is a TAX CUT for everyone!!! Less money for goverment and more for you!!!
BTW- how ya liking the endless stock market records. Our 401K retirement plan is booming baby!
10,000 cap is SALT and prop tax deduction total
“First, the linked story is about ONE economist’s claim that the Republican tax cut would hurt homeowners. Nonsense. It might hurt wealthy homeowners because the property tax deduction under the proposed bill would be $10,000 and the mortgage deduction would go down to $500,000. That affects the wealthy owners not the poor or middle class ones…Well, under the Republican tax cut no longer can someone in a state with income taxes claim a deduction.”
Partially correct….They are not getting rid of the state income tax deduction. But they are combining it with the property tax deduction within the 10,000 cap. So, I wouldn’t agree that it only impacts the wealthy in Evanston. Somebody with a 300,000 house would pay about $7,500 in property taxes in Evanston. If that family has one parent making the avg salary as a teacher at ETHS, their total SALT and prop tax would be about $12,500, over the 10,000 cap. I wouldn’t personally say that family is “rich” and living in a super expensive home.
Another correction
Mortgage deduction is going down to $750k, not $500k. $500k was in the house proposal, but the final version increased it to $750k. Although current homeowners are grandfathered into the $1M that was currently on the books.
Guess YOU Don’t Pay Property Taxes in Evanston
The tax bill on my property is well over $10, 000 a year for a 115 year old home maybe worth $300,000. And no doubtedly will be going up in 2018. On the bright side, it’s still cheaper then renting in Evanston
What changes will the city make?
State Income Tax will be part of the $10,000 figure.
Many expect many more people to to take the expanded Standard Deduction to reduce the amount of Charity contributions. The wealthy may still use the existing deductions, but lower and many in middle class may reduce or dramatically reduce giving to churches, food/housing campaigns AND the arts. Will all the multitudes of arts groups see drastic cuts that will make them less viable ? If as some think the tax effects hurt housing prices [even from community wide effects], will taxpayers cut back further [churches, arts] ?
I doubt the Council will re-evaluate their spending for the new reality—they never have before. They will continue to spend like drunken sailors [apologies to sailors], say the “arts are good for you” no matter the cost or who uses them and push the tax burden to their grandchildren.
Agree, why not consolidate
Agree, why not consolidate the 2 small park districts (ridge and lighthouse ) and roll them into Evanston Park districts?
Reality
In reality, in extremely high taxed Evanston, you will most likely pay higher federal taxes. That is not the feds fault but it is the drunken sailors occupying our city council seats. They think more about the “STITCH”, junk art, than the Evanston taxpayers.
“Overvaluing” the arts
Eh – easy target and cop out. If you add up all money the City spends on the arts annually, including public art, salaries, projects, etc etc it is still less than two thousandths of the total budget. Even if everyone on the Council agreed with your assessment that Evanston spends too much on the arts (ironic for what is widely seen as a creative/arts community), cutting the arts would not help the budget very much. Not sure that the “death by a thousand cuts” approach to the budget will solve any problems, and it probably negatively affects quality of life, and most certainly that Evanston charm everyone keeps debating. The arts are not the problem, folks. There are way bigger monsters under the bed.
Monsters?
What are the bigger monsters under the bed and what can and should be done about them?
TP
Booming 401(k)s won’t help many
According to data from the U.S. Census Bureau, only 32% of Americans are saving for retirement in a 401(k). Booming 401k plans do not help two-thirds of Americans.
A booming stock market is good for the majority of Americans
But booming 401k plans help 1/3 of Americans. Isn’t that good?
BTW- there are other retirement plans other than 401k plans and most rely on the stock market. And did I already mention the stock market is booming?
So a good number of Americans who have some kind of retitrement plan are very happy that for the first time ever the stock market has set FIVE records this year!!!!
Make America great again!!!
A foolish consistency is the hobgoblin of little minds…
Al, I’m assuming you’re not “wealthy”, i.e., make make over $500k per year, based on your past comments. But continue your kneejerk love fest with the GOP tax “reform” that will shoot up our deficit – which is very anti-Republican. Anyway, enjoy the $1,000 or so dollars you may receive in tax cuts because the folks who make over $500k will be getting a much bigger tax cut than you on a proportionate basis.
Oh, also all those gubbmint services you probably use, but decry anyway, will be gone.
Government is best which governs least
What gubmint services are you referring to?
I’m getting a tax break – more money for me. It’s only happening because of the Republican party. Not one Democrat voted for a tax cut. Not one.
If “wealthy” folks get a tax break, great. Why should I care? Ever been hired by a poor person? Do poor folks create jobs?
The deficit grew $10 trillion under Obama, including the $1 trillion stimulus bill that paid to keep local governments afloat. So what’s another trillion to stimulate companies to invest and create jobs?
The idea is we will grow our way out of the deficit.
A foolish consistency is the hobgoblin of little minds – little minds that believe taxes need to be raised again and again. The author of that quote, Ralph Waldo Emerson, influenced a fellow transcendentalist who thought little of big government.
“Government is best which governs least” – Henry David Thoreau