It looks like Evanston’s referendum to create a graduated real estate transfer tax may be starting a trend.
With voters here weighing the measure in early voting this week, a Chicago alderman, Walter Burnett, is now proposing a similar idea for his city.
If adopted, Evanston would have the first progressive, or non-flat-rate, transfer tax in Illinois.
It’s drawn furious opposition from political groups backed by the Illinois Association of Realtors, which earlier this month contributed $100,000 to a political action committee opposing transfer tax hikes.
The Realtors have sent out a raft of mailing pieces that claim the measure would increase the tax rate 80 percent — while neglecting to mention that rate increase would only apply to properties valued at more than $5 million.
For properties priced at less than $1.5 million there would be no transfer tax increase under the Evanston plan. For those between $1.5 million and $5 million the increase would be 40 percent.
Evanston officials assert that 97 percent of properties sold in Evanston would see no tax increase under the plan, and that it would generate an additional $800,000 of revenue for the city annually.
The Chicago proposal, which Burnett hopes to get on the February ballot there, would add a new 1.2 percent transfer tax on residential properties valued at more than $1 million.
Evanston’s proposed tax hike is not restricted to residential properties.
Burnett says he wants to target the money raised for affordable housing program in Chicago. Evanston isn’t targeting the new tax to any specific use.
Greg Hinz, writing in Crain’s Chicago Business, notes that under Burnett’s plan the levy would hit “almost any three- or six-flat in the city” and says it could lead to rent hikes for tenants in such buildings.
On the other hand, U.S. Rep. Jan Schakowsky, at a news conference this morning is scheduled to blast the $66.7 billion “in tax breaks and givaways to real estate developers” in the newly enacted federal tax bill.
So some voters here may conclude that after those tax breaks, the local RETT hike on high-value properties is just one step toward releveling the tax playing field.
Realtors: Transfer tax hike ‘irresponsible’ (10/15/18)