Hidden in Plain Sight – The Cook County property tax system and racial equity

“Some of the ‘educated’ Negroes do not pay attention to such important matters as the assessment of property and the collection of taxes, and they do not inform themselves as to how these things are worked out.”

– Carter G. Woodson, The Mis-Education of the Negro

“…reorganizing the tax systems in the counties…that kind of thing’s pretty dry to most men”

– Harper Lee, To Kill A Mockingbird

The Kerner Commission report, released in 1968, studied the cause of massive race riots that disrupted cities across America in places like, Newark, Detroit and Chicago. The report concluded that, “What white Americans have never fully understood — but what the Negro cannot forget — is that where society is deeply implicated in the ghetto. White institutions created it, white institutions maintain it, and white society condones it.” The report goes on to say, “Our nation is moving towards two societies, one black, one white –seperate and unequal.” Much has been written in recent years about the policies that led to the creation of the Black ghetto. Numerous books and panel discussions have illuminated the scaffolding that upholds the system that keeps Black families isolated in homes that fail to appreciate  and generate the wealth of White households. It’s hard to find someone who hasn’t heard of the constellation of causal factors frequently kicked around like redlining, restrictive covenants, contract buying, and urban renewal that laid the foundations for housing inequality, spatial segregation, and the racial wealth gap today. The financial cost of these policies combined with the otherwise taxing low-wage jobs available to Black families that struggled to make ends meet in cities has been aptly coined “The Color Tax“.

The wages of whiteness

About a century ago, W.E.B. DuBois described this as the “wages of whiteness”, or “the privileges that would accrue to Whites through application of racist ideas and segregation” (Kendi, Ibrim. Stamped from the Beginning: The Definitive History of Racist Ideas in America. New York. Nation Books. 2016. p. 331). While these examples of ghetto construction are particularly disturbing, one aspect has evaded civil rights leaders, historians, and Twitter activists – being hidden under the cover of big city politics and obscure real estate jargon. Although not widely considered a central plank in the agenda for the preservation of Black lives, unfair property tax assessments have constricted Black families from the American dream since the inception of Black land ownership. Property tax equity scholar Andrew Kahrl points out that unfairly burdening Blacks with disproportionately high taxes dates as far back as the Reconstruction era. Karl describes, “The overassessment of African-American property owners is almost as old as African American property ownership in America…As black men and women struggled to build a land base in the post-Emancipation South, local white assessors routinely – and systematically – overassessed the value of black-owned property, forcing disenfranchised black populations to pay more in taxes for fewer and far inferior public services”(Kahrl, Andrew. Shaped by the State: Toward a New Political History of the Twentieth Century. Chicago. University of Chicago Press. 2019. p. 191). This practice was not just relegated to the post civil war South, but occurred across America after the great migration of Black families to northern cities like my own hometown – Chicago.

Discrimination by property tax assessors is harder to prove than discrimination in public drinking fountains, toilets, and buses. Property tax assessors speak a language of mass appraisals, valuation, regression analysis and CAP rates that can be difficult to decode. For this reason, overtaxation may be one of the lost civil rights issues past and present. This issue wasn’t lost on Chicago’s first Black mayor, Harold Washington, however, who when he was state senator of Illinois waged war against the unfair property tax assessment system in Cook County. He proclaimed, “I have never known an issue which has aroused such explosive concern in my community…we’re playing with dynamite” (Kahrl, Andrew. Shaped by the State: Toward a New Political History of the Twentieth Century. Chicago. University of Chicago Press. 2019. p. 202). Washington helped organize the Black Taxpayers’ Federation and planned to file a class action lawsuit on behalf of Black property owners who had been overassessed.

Property tax assessors after World War II and particularly in the 1960s, overassessed poor Black families in Chicago, while downtown developers and suburban homeowners got fat with tax breaks. Harold Washington described this process deftly, “if your taxes are lower, because mine are higher, then you [have been] unjustly enriched. I don’t expect you to give it up willingly, no I expect you to go kicking, screaming and yelling, into the twentieth century, but you’re going there one way or another” (Kahrl, Andrew. Shaped by the State: Toward a New Political History of the Twentieth Century. Chicago. University of Chicago Press. 2019. p. 205). Artificially low tax assessments were a tool wielded to lure White families to cozy suburban bedroom communities away from Blacks and boost commercial development in downtown Chicago. This left Blacks isolated in the heart of cities to shoulder higher property taxes in addition to other tariffs. As a result, neighborhoods like Lawndale on Chicago’s West Side saw a spike in taxes despite rapidly decreasing property values. Kahrl describes, “in cities such as Chicago, Illinois, tax assessors consistently overvalued property in African-American neighborhoods relative to white neighborhoods…When compared to the rest of the city, downtown property owners, as well as the predominantly white residents of the county’s booming suburbs, enjoyed scandalously low tax assessments. Vague state guidelines and lack of oversight allowed local assessors to abuse their powers with virtual impunity” (Kahrl, Andrew “Capitalizing on the Urban Fiscal Crisis: Predatory Tax Buyers in 1970s Chicago”. Journal of Urban History. Sage. 2018., Page 387). 

How the property tax system works

If property tax assessors do not value properties accurately, or worse, are biased in their assessments, other property owners, and often the most vulnerable, pay the price. Property tax bills start with local levies, the money that cities need to provide services and support school districts. Most levies are approved by local governments or by voters. In Chicago currently, the majority of revenue levied goes towards funding schools (52%) and another 25% funds city services like the public library, debt, and pensions (Property Taxes in Chicago, Dec. 11, 2019). Once the levy is fixed in place, the assessor, usually at the county level, is tasked with equitably distributing the share of the tax pie across all property owners. Assessors are supposed to follow the market when appraising properties and value them evenly, according to what the property would sell for in the marketplace, or fair market value. Since assessor’s offices sometimes value millions of properties at a time, they rely on mass appraisal models, rather that appraising each property individually. Ideally, assessor’s are supposed to be fair and even better, show their numbers and models so they’re legible and predictable. This is important because the property tax system is interconnected – if any one neighborhood or housing type is assessed without uniformity, property owners elsewhere in the system have to pay more to make up that levy. When the tax burden is imbalanced with lower valued property owners paying more of the tax share, this is called “regressivity”.

Cook County assessors played a significant role in creating the vast racial wealth gap between Black and White families that we see today. In Cook County, especially in the 1960s and 1970s, assessor’s fixed regressivity in place by employing opaque schemes to overvalue homes in predominantly African-American neighborhoods and undervalue downtown commercial buildings and suburban homes occupied by mostly Whites. A famed 1979 UIC study of 4000 properties in 12 Chicago neighborhoods, found that market prices and tax assessments in African-American neighborhoods were assessed at a higher percentage of market value than properties in White neighborhoods (Kahrl, Andrew “Capitalizing on the Urban Fiscal Crisis: Predatory Tax Buyers in 1970s Chicago”. Journal of Urban History. Sage. 2018. Page 394.). In the 1970s, Cook County assessors used vague state guidelines and lack of oversight to preference White property owners and allies with clout connected to the Richard J. Daley (aka “The Boss”) democratic machine. Notably, the neighborhood of Bridgeport, where Daley lived, enjoyed some of the lowest property assessments in the city while many Black neighborhoods were assessed at three times as much as properties here (The Metropole Blog: All Stick No Carrot: Racism, Property Tax Assessments, And Neoliberalism Post 1945 Chicago). Renowned community organizer, Saul Alinsky, uncovered gross unfair reassessments in 1971 along with the organization he founded, the Citizens Action Program (CAP). He found that major businesses were benefiting from significant underassesments including US Steel’s South Works Plant, which received a $17 million tax break annually from the Cook County assessor, along with Illinois Central Railroad, Cook County steel mills and numerous downtown skyscrapers (Kahrl, Andrew “Capitalizing on the Urban Fiscal Crisis: Predatory Tax Buyers in 1970s Chicago”. Journal of Urban History. Sage. 2018. Page 387). Other research uncovered that intentional underassessments were not just doled out to the nation’s largest steel conglomerates but also First National Bank, Arlington Park Race Track, and The Woodfield Shopping Mall (Kahrl, Andrew. Shaped by the State: Toward a New Political History of the Twentieth Century. Chicago. University of Chicago Press. 2019. p. 198, 200). CAP continued to expose blatant bias engineered by the assessor’s office and found that on average, properties were assessed throughout the city at roughly 22 percent of appraised value while predominantly Black neighborhoods were assessed between 35 and 44 percent (Kahrl, Andrew. Shaped by the State: Toward a New Political History of the Twentieth Century. Chicago. University of Chicago Press. 2019. p. 388).

Although regulations were loose, assessor’s still needed to use a mechanism to stand behind their fake math. In many cases, they used a “replacement cost” or “fraudulent uniformity” approach to valuation to fudge the numbers. This malpractice values property based on the cost of building materials rather than market value – giving the impression that a structure on the West Side of Chicago could be more valuable than one in a pristine suburb. This allowed some assessors to justify leveling higher assessments on properties in lower-income areas. In a twist of irony, or White privilege, the more underassessed property owners were still the ones with the highest complaints to the assessor’s office that they were the victims of being overassessed and consequently filed the most appeals (Kahrl, Andrew. Shaped by the State: Toward a New Political History of the Twentieth Century. Chicago. University of Chicago Press. 2019., Page 388.).

Conclusion

Overassessments increase the cost of living and decrease the value of property for low-income people. Housing is a more valuable asset for poor families than those with higher net worths. For many, it’s all they have and their only vehicle to building wealth. Overasessments can also make poorer homeowners vulnerable to foreclosure and predatory tax buyers. For those who simply cannot pay, it can lead to abandonment of the home altogether. As Kahrl points out, “Higher property taxes inflicted a double, mutually reinforcing penalty on black homeowners, forcing them to shoulder a heavier tax burden (for inferior public services) than whites, and, because of this, reducing the market value of their homes even further” (Kahrl, Andrew. Shaped by the State: Toward a New Political History of the Twentieth Century. Chicago. University of Chicago Press. 2019., Page 382-383). Some have estimated that tax breaks given to big companies in the 1970s removed $100 million from the tax base. As mentioned earlier, when one segment of tax payers is given a break, the levy that needs to be raised by local governments increases everyone else’s taxes. In Chicago, this meant Black families on the South and West sides of the city paid more. As a consequence, they were put at greater risk of losing their homes and were robbed of home equity that became the foundation for generational wealth in the US and remains at the heart of White economic advantage today.

Published by Kelwin Harris

Kelwin Harris is a public speaker, city planner and public engagement professional who focuses on creating equitable communities, empowering people that have been historically excluded from connectivity, and dismantling inequity in Chicago.

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