RUSH: The Chicago Federal Reserve has unveiled its solution to the pension problem. A speaker from the Chicago Fed — this is at an event that was sponsored by — it was last month — sponsored by the Civic Federation and the Federal Reserve Bank Chicago — Illinois has unfunded liabilities, particularly on pensions, that are off the charts.
“A speaker from the Chicago Fed proposed levying, across the state and in addition to current property taxes, a special property assessment they estimate would be about 1% of actual property value each year for 30 years.
“Homeowners with houses worth $250,000 would pay an additional $2,500 per year in property taxes, those with homes worth $500,000 would pay an additional $5,000, and those with homes worth $1 million would pay an additional $10,000,” a year for 30 years, on top of existing taxes.
Furthermore, you would not be able to escape this by selling your house and leaving. You know why? You’re not gonna be able to sell your house. Nobody’s gonna buy your house in Chicago with this kind of taxation on it.
And the people that come up with these rules — this is the reasoning from the Federal Reserve Bank of Chicago. “New taxes wouldn’t affect people thinking of moving to Illinois. While they would have to pay higher property taxes, that would be offset by not having to pay as much for their new homes. In addition, current homeowners would not be able to avoid the new tax by selling their homes and moving because home prices should reflect the new tax burden quickly.”
In other words, they fully expect the value of you in Chicago and Illinois who own your homes, the value of those homes to plummet with the application of these new property taxes. So people arriving in the state are gonna be able to afford your house because you’re gonna have to practically give it away, which means you’re gonna lose every bit of equity and wealth you have in your house if you try to sell it and leave.
“Current homeowners would not be able to avoid the new tax by selling their homes and moving because home prices should reflect the new tax burden.” That means nobody’s gonna want to buy. They’re admitting, they’re admitting that the dynamic results of this is going to be to destroy the Illinois housing market, but that they have to do it to come up with some money to help fund underfunded pensions.
So, in other words, they’re just gonna confiscate wealth from current homeowners because they will pay, whether they stay or not, through an immediate reduction in home value. This proposed tax will only address five state pensions. There are 650 other pensions in Illinois, particularly those who overlap jurisdictions in Chicago, which are grossly underfunded.
They do not understand that people will not build on or improve property when property taxes are that high. Why would you undertake any effort to expand, remodel, or otherwise increase the value of your home when you will be facing an additional 1% property tax on it in addition to everything else? For 30 years. And these are not insignificant sums of money. The people that already don’t have, and now they’re gonna have to come up — and, by the way, this, it is stated here, property values, by the way, are already 5% of home values in some cases.
But what is it? Maybe that’s another story. This is only going to — no. That’s Seattle, a different story. Different story. They have a per-employee tax they’re voting on in Seattle, which is causing Amazon to stop building their new headquarters.
These socialist-run places are in the midst of destroying themselves. They’ve got these unfunded pensions in Illinois, massive property tax increases, and you can’t even escape it by selling your house and moving because you probably won’t be able to sell your house, ’cause who’s gonna want to buy these new effective tax rates? It’s just mind-boggling here.