Cook County Property Tax Classification
The Cook County property tax system makes it difficult to strengthen and encourage economic development in existing communities. The previous entry in this two-part web series showed how property tax rates are determined in our region, highlighting the greater property tax burden borne by business taxpayers in Cook County. Now, this entry shows examples of areas in Cook that might benefit from phasing out the County's classification system. Lowering non-residential property tax rates in communities with existing infrastructure and underutilized or vacant infill land may make these communities more attractive for development.
about this two-part issue brief
Property taxes are among the policies that CMAP is evaluating after a regional task force on state and local tax policy submitted an advisory report to the CMAP Board. The first in this two-part issue brief explains how property taxes are determined throughout the region, providing details of how property taxes pay for services delivered by particular units of government. The second highlights how phasing out this system could make established communities more attractive for redevelopment and infill of vacant or underutilized land.
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What the data tells us
This map illustrates total property tax rates as a percent of market value (effective composite property tax rates) levied for the average taxpayer in each municipality across northeastern Illinois. Most of the region's residential property tax rates are below four percent across most of the region, as are the rates for commercial and industrial taxpayers in collar counties, which do not employ classification. In Cook County, however, commercial and industrial rates are above four percent for the majority of municipalities. Click on two areas of the map — West Cook and South Cook — to see where economic development could be spurred by elimination of property tax classifications.
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Composite Property Tax Rates
Source: Various County Clerk Offices
Why this is important
A major goal of GO TO 2040 is to attract development in communities with existing infrastructure and available infill land that is vacant or underutilized.
For a number of Cook County communities that have high property tax rates, elimination of Cook's classification system could help encourage redevelopment.
High tax rates can prompt a cycle where new businesses do not locate in the community, resulting in a tax base that grows more slowly than the cost of public services, which can lead to even higher tax rates for businesses and residents alike. Eliminating the property tax classification system in Cook County may help break this cycle.
An example of infill: vacant land between buildings
The tax rates shown in the maps illustrate effective composite property tax rates levied for a typical or average taxpayer in each municipality in the region during tax year 2009. "Effective rates" means that the rates are expressed as a percent of the market value of properties, rather than the equalized assessed value of properties. The rates shown are also "composite," which means they include rates levied by counties, municipalities, school districts, and special districts. The rates levied by special service areas are excluded in this analysis.
For municipalities in Cook, Lake, and Will counties, typical composite rates were obtained from county clerk offices. Where more than one typical composite rate was provided for a municipality, the rates were averaged. For municipalities in DuPage, Kane, Kendall, and McHenry counties, the typical composite rate was generated by calculating the unweighted average of the composite rates for each tax code within each municipality.
These composite rates were converted to effective rates that show the property tax extension as a percent of market value, rather than as a percent of Equalized Assessed Value (EAV). To estimate effective rates, each collar county's rate was multiplied by that county's median levels of assessment as reported by the Illinois Department of Revenue. To estimate Cook County rates, median levels of assessment as well as the equalization factor assigned by the Illinois Department of Revenue were used.
To estimate ranges of effective composite tax rates in south and west Cook County study areas for commercial and industrial properties if properties were all assessed at the same percent of market value, the estimated aggregate market value of property in each municipality in each study area was calculated by dividing the EAV for each property type in each municipality by the equalization factor and the median level of assessment. Then, for each municipality, the extension generated by both the lowest typical composite tax rate and the highest typical composite tax rate was divided by the estimated aggregate market value.
About the Regional Tax Policy Task Force
As part of its recommendations for efficient governance, the GO TO 2040 comprehensive regional plan called for the creation of a Regional Tax Policy Task Force, which subsequently worked throughout 2011 to prepare its advisory report for consideration by the CMAP Board. The task force's charge, as defined by GO TO 2040, was to advise the Board by:
"...addressing issues central to state and local fiscal policy, viewed through the lens of the regional economy, sustainability, equity, and the connections between tax policy and development decisions."
Concerned about the degree to which commercial and industrial properties are subject to high property tax rates in many Cook County communities as result of property tax assessment classification, the Regional Tax Policy Task Force recommended phasing out this regional inconsistency over a period of years to help residential taxpayers adjust to the increased burden.