Fact-check: Lightfoot taxes facts with claim Chicagoans among most taxed in U.S.
Lori Lightfoot, a former federal prosecutor vying to become Chicago’s next mayor, has repeatedly argued that high taxes are driving lower-income families out of the city.
In May, she made a claim that we rated Mostly False about population loss in the Chicago area, which she dubiously attributed to the tax burden those residents face.
Recently, Lightfoot expanded on her crushing tax burden message with a national comparison.
“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.”
It’s common practice for office seekers to complain with a broad brush about tax burdens. But such sweeping statements often oversimplify the issue.
Lightfoot’s claim, it turns out, is no exception.
Define ‘most taxed’
Lightfoot said Chicagoans live in one of the most taxed cities and the most taxed county, but what she appears to have meant was that Chicago residents are the most taxed because they pay high Cook County taxes on top of high city levies.
“Taxes and fees in Chicago and Cook County are forcing low-income families like the one I grew up in out of this city,” Lightfoot said in a statement emailed by her campaign. “It’s clear we can’t keep treating low-income and middle-class families like an ATM machine with no limit.”
To back that up, Lightfoot pointed to more than 300 fees the city can impose on residents, hefty property taxes and a combined sales tax rate of 10.25 percent on most retail purchases in the city.
But ranking tax burdens is a far more complex exercise than Lightfoot seems to suggest. Take that Chicago sales tax rate, indeed one of the highest in the nation. What the number doesn’t take into account, however, is that Illinois, and by extension Chicago, applies the sales tax more narrowly than do many other places with lower rates.
Here, few services are taxed. What’s more, purchases of groceries and drugs are taxed at a steep discount, meaning the high rate alone doesn’t guarantee Chicagoans pay more in sales taxes.
Ron Alt, a research economist with the Federation of Tax Administrators, said it’s important to account for both state and local taxes to accurately determine where people pay the most overall. Evaluating local taxes in a vacuum can be misleading, he said, because some states take on more of the cost of local functions than others, allowing municipalities to lower their taxes.
Illinois is among the states that pick up less, leaving local property taxpayers to shoulder the lion’s share of public education
costs, which contributes to higher local taxes.
What the research shows
We turned to a report produced annually by the government of Washington, D.C., that analyzes the combined state and local tax burdens residents at five different income levels face in each state’s largest city as well as the nation’s capital. That analysis shows Lightfoot has a point — but only when it comes to low-income Chicagoans.
A hypothetical Chicago family earning $25,000 and consisting of two working parents and one school-aged child faces the fifth-highest tax burden among those 51 jurisdictions. A similar family earning $50,000, meanwhile, pays the 10th-most in major taxes.
But as the income of Chicago taxpayers increases, their burden declines relative to that of similar earners in other large cities. Chicago families making $75,000 and $100,000 both pay the 16th-highest taxes, while families earning $150,000 rank 22nd among their counterparts.
State constraints on the kind of taxes local governments can levy also play a role. Counties in Indiana, for instance, tack on local income taxes to the state rate, but the Illinois Constitution bars local income taxes.
In Marion County, home to Indianapolis, the combined rate for individuals is 5.25 percent, higher than Illinois’ 4.95 percent income tax. That helps explain why the D.C tax study shows the burden on low-income families in Indianapolis is nearly as steep as in Chicago.
Our ruling
Lightfoot said, “we live in one of the most taxed cities and the most taxed county, unfortunately, in the country.”
By that, she meant Chicagoans are among the most taxed because they pay high county and city taxes.
It’s clear the tax burden in Chicago is regressive, taking a bigger bite out of the overall incomes of poorer residents than the wealthy. That’s a byproduct of not only local but state tax policy.
So Lightfoot would have been correct had she claimed that low-income Chicagoans are some of the nation’s most taxed. And her broader comments do suggest those residents were the focus of her concern.
Instead, she made a blanket statement that plays straight into a common but misleading narrative that all in Chicago pay punishingly high taxes.
We rate her claim Mostly False. The Better Government Association runs PolitiFact Illinois, the local arm of the nationally renowned, Pulitzer Prize-winning fact-checking enterprise that rates the truthfulness of statements made by governmental leaders and politicians. BGA’s fact-checking service has teamed up weekly with the Sun-Times, in print and online. You can find all of the PolitiFact Illinois stories we’ve reported together at https://chicago.suntimes.com/section/politifact/.