Governor J. B. Pritzker returned to Illinois last month, fresh from a United Kingdom tour designed to drum up business and attract new investment. But his international sales trip is likely to hit a major roadblock, one that companies struggling to stay in the state already understand: the business environment is hostile.
During the past decade, Chicago’s commercial property taxes have jumped 93 percent. The city taxes commercial properties at 3.78 percent of their value each year—the nation’s second-highest effective tax rate and more than double the average for the largest cities in each state. By comparison, San Francisco has an effective rate of 1.18 percent.
Chicago can’t expect to attract new businesses while imposing oppressively high taxes. Fueled by unchecked local government spending, Chicago’s companies and iconic landmarks face a relentless, uphill financial battle. Business prospects will remain thin until the situation is addressed.
Consider the plight of the Marinos family, owners of Bel Mar Wire Products in Bucktown. Their journey embodies the American Dream—immigrants who built a stable, family-owned manufacturing firm. But in December 2022, they were ambushed by a nearly 400 percent property-tax hike. Their massive tax bill forced them to let half of their dedicated workforce go.
“We just went through COVID. Closures, price increases, surges of gas, of food, insurance, costs, short labor supplies,” said Aliki Marinos. “We feel like you’re kicking us out, like you don’t want us here, like you want us to fail? That’s what it seems like.”
Marinos’s frustration mirrors that of other businesses in the area, big and small, struggling under crushing tax burdens. Cook County business owners in the north and northwest suburbs saw a 134 percent increase in property tax hikes in the past 20 years, from $12,282 to $28,710. Commercial property tax hikes in the south and southwest suburbs were not far behind.
The famed Willis Tower saw its property taxes rise by 29 percent in 2022, resulting in an $11 million hike in a single year. That brings the tower’s property tax bill to more than $50 million annually. Prudential Plaza and its 64 stories saw a similar 24 percent increase, bringing its bill to over $27 million last year. These hikes will likely get passed on to tenants in the form of rent increases.
Mounting commercial property taxes have likely contributed to Chicago’s office vacancies surging to an all-time high. The city lost 33,000 residents in 2022, second only to New York City. Over the last 12 months, six companies announced that they would move their office headquarters out of Chicago, which will surely mean a loss of jobs.
Instead of trying to correct this alarming trend, Mayor Brandon Johnson’s allies have pushed for a city income tax of 3.5 percent on any household with annual income above $100,000. That once-magical salary figure is far from rich today: data show an income of $100,000 in Chicago is equivalent to take-home pay and buying power worth just $59,505 in the average American city. Expanding the city’s property-tax regime with proposed income taxes won’t hurt the corporate elite, but it will smother small businesses and families and encourage more departures from the city.
Traveling abroad for business leads can’t be the only solution Pritzker has to offset the current exodus. He must work with Mayor Johnson to ensure the city avoids implementing new taxes on businesses. That might mean resisting a proposed $4-a-month head tax on each employee of a company and standing firm against a transactions tax that would threaten the entire financial sector.
This isn’t merely about the figures on a tax bill. It’s about a fundamental right to live and work. It’s about generations of immigrants, such as the Marinos, who chose to put down roots in Chicago—anchoring communities, employing residents and neighbors, and fueling the economy. It’s about a city’s promise of opportunity, now darkened by exorbitant taxation (among other problems).
The solution isn’t more taxation but the implementation of fiscal policies that control spending while kindling growth and nourishing the city’s entrepreneurial spirit. It’s long past time to revitalize this city and champion the grit and tenacity that have always defined it. Chicago’s storied legacy deserves nothing less.
“We love this city,” Marinos says. “We just need it to love us back.”
Photo by Jakub Porzycki/NurPhoto via Getty Images