Don't Mess With Taxes

Update, Wednesday, March 20, 2024: The ruling that the Chicago housing ballot measure was invalid was overturned on March 6 by the Illinois First District Appellate Court, so the matter went to the city's voters on March 19. The latest count shows it failing by a 54 percent to 46 percent margin. The election board will finalize vote totals by April 9.

Photo by Rachel Davis on Unsplash

A person's home is the owner's castle. Some homeowners think that's how tax collectors view their properties, especially when it comes to real estate tax assessments.

In some places, local officials want to collect even more from grander abodes.

But such mansion tax efforts in two of the country's largest cities, Los Angeles and Chicago, have hit roadblocks.

Court blows down Windy City tax measure: Chicago's proposal to increase taxes on real estate transactions of $1 million or more was struck down on Feb. 23 by a Cook County judge.

The tax was to be put to city votes on March 19, but the court agreed with the local chapter of the Building Owners and Managers Association that the ballot question "misleading and unconstitutional."

The Chicago tax on higher priced residential and business property was proposed by the new Windy City Mayor Chicago Mayor Brandon Johnson. The revenue would be used in part on efforts to help city's homeless population.

However, Cook County Circuit Judge Kathleen Burke ruled that the tax ballot measure violated state election rules. Essentially, she found that the initiative improperly added another issue to the question as a way to get enough votes for the main topic.

In the mansion tax matter, the judge appeared to rule that the ballot measure would have improperly allowed Chicagoans to vote on whether to raise taxes on some people and businesses, while at the same time cutting taxes for others. The overall effect, according to the ruling, makes it unclear to voters which measure they actually would decide.

The Johnson administration said the tax on expensive real estate transactions could raise $100 million a year for homeless relief efforts. City officials say they will appeal the court's ruling.

State voters could kill LA tax: A thousand miles to the west, Los Angeles' version of a mansion tax that was approved by City of Angels voters in 2022, may be invalidated by all California voters this November.

The L.A. mansion tax increased transaction taxes on transfers of real estate within the city from 0.56 percent of the price of the property, less any transferred debt, to up to 6.06 percent of the price, regardless of debt transfer.

The Los Angeles tax has survived legal challenges, but a comprehensive constitutional amendment on this fall's Golden State ballots would set uniform limits on state and local taxes, and retroactively limit tax increases.

If approved, The Taxpayer Protection and Government Accountability Act, more popularly known as the shorter Taxpayer Protection Act, would effectively take the L.A. mansion tax off the city's books.  

Any voided local special tax adopted after Jan. 1, 2022, like Los Angeles' mansion tax, could be re-adopted as long as it is subsequently approved by the Taxpayer Protection Act's supermajority two-thirds approval requirement.

You also might find these items of interest:

• Where mansion tax money goes in the 17 locales collecting it
• New Jersey is number one in property taxes
• KY homeowners get 8 years of free services due to tax office recording error

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