Taxes and housing prices drive some Chicagoans out

By Yingcong (June) Fu

The third largest city in the U.S., Chicago has been seeing a slow population growth due to high tax rates and living expenses.

According to the census data by the U.S. Census Bureau, the population of Chicago grew 0.9 percent to 2.7 million in the five years from 2010 to 2015, much slower than the growth rate of 2.2 percent in New York and 4.7 percent in Los Angeles.

It is even likely to be surpassed by Houston, the fourth largest city, where the population in the same period grew 8.9 percent to 2.3 million, just 400,000 behind Chicago.

The population growth of Chicago is the slowest among the four largest cities in the U.S. (Yingcong (June) Fu/MEDILL)

“Everything here is about tax,” said Joseph Ramirez, who lives in the South Side of Chicago and is looking for a house out of Chicago, to get out of the packed city and have more space.

Tax has been the biggest concern of Chicagoans. With a 6.25 percent sales tax rate in Illinois, plus a 1.75 percent tax in Cook County, 1.25 percent in the city and a special tax of 1 percent, the sales tax rate in Chicago is 10.25 percent, the highest in the country.

The tax rate climbed previously to 10.25 percent, in 2008, when Cook Country raised its tax by 1 percentage point. In 2010 the total dropped for a time to 9.25 percent, but bounced back up in 2016.

High housing prices also discourage some residents, who prefer spending more time in a commute to seek lower costs, though that doesn’t necessarily mean moving to the suburbs. “I never think about living in the Loop. It’s too expensive to live here,” said Sam Battia, a search engine strategist in a marketing agency in downtown Chicago. Living in a house in the Edgewater neighborhood, Battia takes more than half an hour on the Red Line every day for work.

Chicago is only three-fourths of its size in 1950, when the city reached its highest population of 3.6 million. The population started to drop in the 1960s, following the anti-urbanism trend of the mid-20th century.

Chicago used to be the second largest city in the U.S. with a population of 3.6 million in 1950. (Yingcong (June) Fu/MEDILL)

There is no evidence today of another anti-city trend, said Anne Dodge, executive director of UChicago Urban, an urban study program at the University of Chicago. Dodge said that the current demographical change is mostly due to economic reasons like job change.

But what ties some people to Chicago is also jobs, evidenced by a move downtown by McDonald’s Corp. headquarters and other big corporate employers. Job convenience at least partly offsets the drawbacks of living in a city. “There are taxes to consider, but there are opportunities here,” said Mary Helen Cutler, an Illinois agent at Redfin, a real estate company headquartered in Seattle, Wash.

While some people abandon downtown, some neighborhoods in Chicago are still “hot,” especially among young people, who are looking for a location convenient for both work and living, Cutler said.

Charlie Salto has been living in suburban Evanston for years with his wife, who grew up in the Chicago suburbs. Although he dislikes the high tax rate of an upscale community and the climate, Salto has never considered moving into the city.

“The politics is a kind of nonsense. The government officials can’t pass a budget. Teachers have to go on strike just to get a decent work environment. It is off-putting for people living in this area,” Salto said. “But I like my job, and I’m not looking to relocate.”

Photo at top: The circular towers of Marina City, at right on the Chicago River downtown, are representative of a decades-long trend of apartment building construction that continues to provide in-town housing alternatives to Chicago neighborhoods and the suburbs. (Yingcong (June) Fu/MEDILL)