Over the last few weeks I’ve seen something heretofore unimaginable—people eagerly volunteering to pay property taxes that aren’t due for another three or four months.
It was like paying property taxes had become the new sexy, with ordinary citizens lining up like happy hipsters looking to throw away hundreds of dollars on the latest cell phone.
Even Cook County treasurer Maria Pappas got into the act, holding press conferences to boast that it had never been so easy to prepay your takes—so come on down and enjoy the fun!
“Here to pay your property taxes?” she told residents wandering into her office last week. “Good. First have some baklava and cake and coffee.”
As of this past weekend, the treasurer’s office had received about 113,400 prepayments, up from just 1,775 last year. That means taxpayers have paid more than $692.3 million in property taxes, which Pappas’s office will distribute to the city, the county, the schools, and other taxing bodies.
Dig it, man—people voluntarily paying their taxes up front!
Look, I hate paying taxes as much as the next guy. But I think any sane human would agree they’re a necessary evil if you want to have schools and police and firefighters and safe roads and health care and other trappings of modern civilization.
Alas, it’s sort of the opposite. People are prepaying now in order to pay less in the future. That’s because Donald Trump and his congressional sidekicks—including Republican congressman Peter Roskam of the sixth district—teamed up to pass a law that limits the amount of property taxes you can deduct on your federal income tax returns.
Before the new law there was no limit. So if you earned $100,000 and paid $20,000 in property taxes, you could deduct that 20 grand from your taxable income and pay taxes on only $70,000. Depending on your tax rate, that could save you several thousands of dollars a year.
The new law limits taxpayers to a deduction of $10,000 in state and local taxes, including the property tax.
Trump and Roskam claim the change is needed in part to make our tax system less complicated—a reminder never to believe anything a Republican has to say about pretty much anything these days.
In this case, the Republicans have not only managed to make our tax laws even more complicated, they’ve got taxpayers rushing to take advantage of the fine print.
Specifically, property owners in Cook County hoped to bypass the new federal cap on property tax deductions, at least for a year, by paying next year’s first installment before December 31. Hence the mad storm of anxious taxpayers—not just in Cook County but all over the country—to pay early and take advantage of that property tax deduction before it’s too late. And that’s despite warnings from the IRS that, owing to various factors, a number of these early filers may not qualify.
The bottom line is that, once again, the system is set up to benefit the well-to-do and well connected. The cap on deductions wouldn’t be so bad if Trump were jacking up income taxes on his fellow billionaires so there’d be more money to distribute for things like public schools. But of course, Trump and his Republican allies headed in the opposite direction with the tax law, which slashes top rates on individuals and corporations.
Moreover, they’ve expanded something called the 529 tuition plan. This is a tuition program that enables people to withdraw up to $10,000 tax-free dollars a year from an investment fund they’ve set up to pay for college tuition. The new tax law now allows people to withdraw money for private elementary and high school tuition as well.
So Trump is allowing people to get a tax break for paying private school tuitions, while limiting the deductions they get for funding public schools. In short, he’s taking money from public schools—open to everyone—and giving it to private schools limited to the few. In the name of tax reform, of course.
As you may recall, we did something of the same sort right here in Illinois last year with the education distribution bill. In that instance, Governor Rauner forced Democrats into supporting a provision that enables the wealthy to get tax credits for donating to private schools.
I call it school aid by blackmail—because Rauner vowed to veto any school aid bill without the tax credit provision. It was bad enough that he forced the Democrats to agree to the bill. But then we had to watch the sickening sight of watching Mayor Rahm joining Rauner at a press conference to hail each other for passing a bill that despite some improvements still undercuts the cause of public education.
That memory makes me even more depressed. So in an effort to cheer everyone up, let me point out that Chicago’s prepaying property taxpayers means there will be more money up front for our always dead-broke Chicago Public Schools. This may keep CPS from running short as it has the last few years.
On the other hand, I’m not sure this is a great thing, considering how Rahm’s getting ready to divert millions from the school to the Cortland/Chicago River TIF District, which may be used for handouts to Amazon, one of the richest companies in the world. Not only do we not have enough money, our local politicians waste what money we have.
It’s a good thing we’ve got some elections coming up—clearly, more resistance is needed. v