By Michael Lucci -
Mayor Rahm Emanuel’s pension reform scheme passed through the General Assembly this week and has been moved to Gov. Pat Quinn’s desk. This plan authorizes Chicago to raise $2.25 billion in additional property taxes over the next decade. Despite this massive tax hike, the city will raise only half its legally required pension payments.
Hiking property taxes will kill jobs, drive away entrepreneurs and force people to flee the city. In fact, people and their incomes are already fleeing in droves.
According to Internal Revenue Service data, from 1992 to 2010, Cook County sustained a net loss of 1.1 million people as a result of migration into and out of the county.
Not only that. The average person who leaves Cook County makes $12,500 more than the average person who enters.
Illinois already has the second-highest property tax rates in the country. In Chicago, property taxes are weighted to fall more heavily upon businesses. Business establishments and job creators are taxed at two-and-a-half times the rate of homeowners.
As a result, fewer jobs are created, and businesses and people move elsewhere for opportunity. Businesses have been crossing borders to locate in Indiana and Wisconsin, and people are following businesses over the border.
The loss of personal annual income due to out-migration has been devastating. In current dollars, Cook County has lost $40.5 billion of personal annual income due to people leaving.
The Chicago City Council should address the root source of the pension problem, which is political control of worker retirements. Only real reform will provide a secure retirement for city workers and lift the burden of property taxation off job creators and entrepreneurs.
Until real reform is enacted, city workers will be without retirement security, and city residents will continue their exodus.
Michael Lucci is Director of Jobs & Growth at the Illinois Policy Institute