Chicago Teachers Union calls for nearly $500M in tax hikes

The Chicago Teachers Union, or CTU, on May 4 unveiled its plan to save Chicago Public Schools, or CPS.

Absent from the plan are structural reforms to ensure more money flows to the classroom, calls for cost savings in general, and any signs of awareness that Chicagoans are shouldering the largest property-tax increase in city history.

Instead, CTU is pushing for hundreds of millions of dollars worth of tax hikes.

The tax hikes are as follows, along with revenue estimates from the CTU:

  • Creation of special property-taxing districts in affluent school districts to fund poorer school districts – $100 million
    • Special service area taxing districts would levy additional property taxes on homeowners who live in parts of the city deemed “affluent,” as well as any area with a high-performing public high school. The money would go to these respective high schools in place of CPS funding, which would then be directed to other schools.
  • Imposition of a commercial property-tax assessment – $100 million
    • This change would automatically set the assessed value of a commercial property at 25 percent of its sale price. This change is effectively a $100 million property-tax hike on Chicago businesses, which before the record 2015 property-tax hike already paid the third-highest commercial property taxes in the U.S. when compared with the largest city in each state, according to a study by the Lincoln Institute of Land Policy and the Minnesota Center for Fiscal Excellence.
  • Raising the Chicago vehicle fuel tax by 10 cents a gallon – $98 million
  • Reinstating and quadrupling the corporate employer expense tax – $94 million
    • Also known as the “head tax,” CTU wants to tax Chicago businesses for every employee they hire.
  • Raising the personal property lease tax to 11 percent from 9 percent – $35 million
    • This tax primarily impacts car rentals, which Chicago already taxes at an absurdly high rate. A $100 car rental racks up nearly $25 in taxes and fees, according to a study from the Global Business Travel Association.
  • Increasing the Chicago hotel tax to 6 percent from 4.5 percent – $30 million
    • The increase would push the total tax rate on Chicago hotels to 18.9 percent from 17.4 percent. This would make Chicago’s hotel tax rate the highest in the nation, according to a 2015 report from HVS Global Hospitality Services.

Additional revenue increases mentioned by CTU include redirecting a proposed $1.2 billion bond for the Lucas Museum toward CPS, and diverting all tax increment financing funds not tied to debt service or an active project to CPS. CTU estimates the former would generate $30 million in revenue, and the latter $100 million.

Revenue solves funding problems,” CTU President Karen Lewis said in a press release.

If only it were so simple.

If CTU just wants more revenue, it should focus on the reasons Chicago is such an economic laggard. High taxes, fees and regulatory burdens are a major part of that. And so is crippling government-worker pension debt, which has been skyrocketing for years as union leaders such as Lewis looked the other way.

Now, Lewis thinks it’s taxpayers’ responsibility to pick up the tab for CTU’s and city officials’ irresponsible decisions. But mere months after a record-breaking tax hike with no reform to show for it, Chicagoans are already tapped out.

Find another way.

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