The fiscal watchdog also issued a report warning that Chicago leaders may not have studied the issue thoroughly before putting it on the March 19 ballot.
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A ballot measure that would raise taxes on homebuyers purchasing real estate over $1 million could appear on Chicago voters’ ballots next week and have their votes counted, according to an Illinois Supreme Court ruling Wednesday.
This is Second consecutive loss Homeowners and real estate groups have been fighting to prevent the measure from reaching the March 19 ballot, which could end a legal battle that prevented voters from taking part in the measure.
Early voting is already underway, and real estate groups were initially fighting to prevent votes on the measure from being counted. win in lower court before losing the appeal and According to Wednesday’s ruling.
The Supreme Court did not elaborate on its ruling against the real estate group.
The proposed tax increase was a top priority for first-term Mayor Brandon Johnson, who hoped to raise more than $100 million a year through higher taxes on properties over $1 million.
Currently, buyers of residential and commercial real estate in Chicago pay a flat tax of 0.75% on all purchases, regardless of price. The measure would create a three-tier rate system.
For properties priced under $1 million, buyers will see a slight tax reduction, to 0.6%. The tax rate will increase to 2% for properties between $1 million and $1.5 million, and 3% of the purchase price for all properties above that price.
Supporters say the money raised will go toward programs to help the homeless and build new homes. Opponents, including Illinois real estate agents, say the measure is a hidden property tax increase that will be passed on to renters and homeowners.
Although the proposal is often referred to as a “mansion tax,” research shows it would hit the commercial real estate industry hardest because the tax increase would apply to both residential and commercial sales.
watchdog warning
Earlier in the day, the fiscal regulator issued a report cautioned that Chicago leaders may not have studied the issue thoroughly before voting late last year to put it on the March ballot.
Citizens United said it reviewed the proposal, called “Bring Chicago Home,” and had “grave concerns” about the measure.
“The city’s work on this policy proposal is not complete,” the federation wrote. “Given the stakes, it is critical that city leaders act quickly to provide more public-facing implementation details and analyze the possible positive and negative consequences.”
As part of its study, the federation said it reviewed recent tax increases in Los Angeles. In its first eight months, regulators found the tax had raised only $150 million of the $600 million to $1.1 billion it was expected to generate.
The tax increase has had other negative impacts, the regulators wrote, including “a disincentive to build multifamily housing and the continuation of multiple tax avoidance strategies that could reduce the revenue generated by the new tax.”
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