Robin Hood populism

By Bruce Thompson

A big part of the Barack Obama philosophy is to bring more money into poor neighborhoods by a variation of a well established Cook County Illinois policy, which I will call Robin Hood Populism. It is the promise to tax the rich to give to the poor. But the recent examples of how this has hurt Cook County (about half of the county is Chicago proper) have not been publicized.

For the purposes of this policy "the rich" means corporations (translation: employers). With that well running dry, the county was recently forced to increase sales taxes. When the new taxes take effect later this year, Chicago will have the highest sales tax rates in the country. The state portion of the sales tax is 6.25% (click the sales tax tab). The new rate in Cook County will be 10.25%, the 4% difference being city, county and regional sales taxes.

The historical existence of this policy can be seen in long entrenched property tax assessment rates. All of the Illinois counties, save Cook, assess property at a 33.33% of fair market value rate for residential and commercial/industrial property (click the property tax tab). Cook County discriminates between "the rich" and residential tax rates. Here is a link which will detail the concept in more detail . With matchless understatement, the author writes

"One can surmise from the above examples that different tax burdens fall on different types of properties. For example, if there are five properties each as enumerated in the above classification model and each worth $100,000 fair market value, the commercial property will be assessed at $38,000, the industrial at $36,000, the multi-unit at $24,000, the vacant land at $22,000, and the residential at $16,000.

"The reason behind the different classifications may lie in politics."

That's right, politics affects property tax assessments. You can see the Robin Hood Populism written in stone in the tax legislation. Outside the six county regional mass transit (METRA) tax zone, the sales tax is 6.25% vs. 10.25%. In all Illinois counties the property tax on an industrial property (e.g. high paying jobs) is 33.33% of market value, in Cook it is 36%; but Cook County residential properties (voters) pay only 16% versus the statewide 33.33%. You can see the source of the job losses in that amazing figure and also the source of the long time support for the Daley Machine.

I first moved to Cook County in the early 1970s. In those days, Chicago was a powerhouse of manufacturing jobs. However, there were some areas that had suffered from the riots of the late 1960s. The industrial plants had been largely left alone, but the retail establishments in their neighborhoods had been torched and sat as burnt out empty shells. It was not conducive to optimism in the ‘hood. The tax squeeze was only to get worse. One example was the Chicago "head tax" which assessed each employer a monthly fee for every employee. How's that for a bad idea, directly taxing employment?

The net result of decades of hideous tax policies has been the flight of manufacturing jobs. For all the moaning about the "Rust Belt", a major part of the problem has been the Robin Hood Politician Belt. In many cases, it is less a matter of the industries disappearing than having them flee the confiscatory tax rates. One example will illustrate the point. Back in the early 1970s Chicago was home to many manufacturers of commercial coffee machines for restaurants. They were built using union sheet metal workers. The manufacturers included American Metal Ware, Bloomfield Industries, Cory Food and Hill-Shaw. Today the coffee industry still flourishes in Chicago, as evidenced by those Starbucks stores, but the jobs are now baristas, not sheet metal workers.