Greising: A Critical Issue That's Been Oddly Overlooked in the Mayor's Race

One candidate—Lori Lightfoot—touched on a topic during a debate last month that merits more attention: the issue of regressive taxation in the city of Chicago.

Chicago mayoral candidate Lori Lightfoot.

BGA President David Greising writes a regular column for Crain's Chicago Business.

The crowd of candidates in Chicago's mayoral contest is so large—21 filed to run—that the leaders seem to be separating themselves by actually proposing ideas for how they might run the city.

After an issues-free gubernatorial campaign, in which J.B. Pritzker won in part on the strength of Bruce Rauner's unpopularity following a highly unproductive four-year term, this comes as a welcome change.

Bill Daley at the City Club the other day said he would adopt policies aimed at reversing a population outflow that has seen Chicago shrink by nearly a million residents since 1950, to around 2.7 million. Some 400,000 African-American residents have left since 1980—a depopulation the size of the city of Cleveland, he noted.

Gery Chico and Toni Preckwinkle have wagged fingers at Target for its plan to shutter two South Side stores. Daley, too.

Chico at a rally last month declared the Target closures "the issue" of the campaign. This seemed odd, because in an October speech at the City Club he pointed out schools and crime as big deals, too. That, plus the use of marijuana and gambling revenues to help close Chicago's gaping budget gaps.

Lori Lightfoot is having a hard time getting attention since Mayor Rahm Emanuel left the race and higher-profile campaigners like Preckwinkle and Susana Mendoza entered. That is unfortunate, because Lightfoot touched on a topic during a mayoral debate last month that merits more attention: the issue of regressive taxation in the city of Chicago.

"We live in one of the most taxed cities and the most taxed county, unfortunately, in the country," she said at a debate in November. "And low-income families and individuals and working families have shouldered far too great a burden because our tax system, our levies and fees have been completely regressive."

Technically, Lightfoot's wording was a bit overstated, as my colleagues at the Better Government Association recently pointed out. But her larger point—about the inequity of how taxation in Chicago affects the rich and the poor—is one that deserves consideration. It would be useful to hear more on this from all the candidates hoping to occupy the office on the fifth floor of City Hall.

A study of taxation by major U.S. cities that was conducted by the government of Washington, D.C., illustrated just where Chicago taxpayers of varying income stand relative to people in similar income brackets in other cities.

According to the study, a Chicago family of two working parents and one school-aged child with household income of $25,000 bears a higher tax burden than similar residents in all but four of the 51 jurisdictions. A similar family with income ranging from $75,000 to $100,000 pays taxes at a rate that is 16th-highest, while a family with $150,000 in income places nearly in the middle: 22nd among the 51 municipalities.

A big factor behind the variation in Chicago's rankings is a heavy reliance on sales taxes to fund local government. Emanuel, in seeking to bring responsibility to Chicago's fiscal profile, raised taxes and fees in six of the eight budgets he pushed through the City Council. The two without tax hikes came—you guessed it—during election years.

Emanuel's tax increases wound up in a situation where Chicago's total tax burden—the combination of city, county and state sales taxes—adds an extra 10.25 percent to most retail sales. That ties the city with Long Beach, Calif., for highest in the nation.

Some cities, like New York, levy income taxes. Some economists see income taxes as more equitable than sales taxes, which hit poorer people especially hard because so much of their income goes toward taxable retail purchases. But Chicago has no income tax, and the state Legislature would need to act before the city could impose one.

Lightfoot is right to point out the inequities in Chicago's tax structure. Now she and the other candidates should spell out their positions on the issue so voters can judge who has the best ideas for how Chicago should raise the money needed to pay its bills.