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.
What the data tells us
This map illustrates total property tax rates as a percent of market value (effective composite property tax rates) across northeastern Illinois. Most of the region's residential property tax rates are below five 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 five 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.
Source: Chicago Metropolitan Agency for Planning analysis of data from the Illinois Department of Revenue; County Assessor and County Clerk offices of Cook, DuPage, Kane, Kendall, Lake, McHenry, and Will counties
- show different classifications
Why this is important
An example of infill: vacant land between buildings
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.
The tax rates shown in the maps illustrate effective composite property tax rates levied in the region during tax year 2012. "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 each taxing district found within each tax code, such as counties, townships, municipalities, school districts, and special districts. The rates levied by special service areas are excluded in this analysis.
Regionwide, effective rates for each taxing district were summed by tax code to produce composite rates. Effective rates were derived by dividing the taxing district's tax extension for each property class reported by the Illinois Department of Revenue, by the market value of the properties within the taxing district. Market value was computed by summing the assessed values of each property in the taxing district by property class, and dividing by the statutory level of assessment in the collar counties and the Cook County ordinance level of assessment for each property class in Cook County.
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.
- Taxpayers in these communities have some of the highest property tax rates in the region. While eliminating classification would reduce rates for commercial and industrial property taxpayers, rates would remain high due to the size of the tax base in these communities relative to the size of the tax levy. But new business developments could increase the tax base and lower tax rates overall.
- High commercial and industrial property tax rates that are partially attributable to classification in these border communities may be a barrier to development of vacant and underutilized land. Property tax rates are as low as two percent for communities just five miles away in DuPage County.