Controversial real estate transfer tax removed from Chicago primary ballot, but what comes next?

A Cook County judge struck a real estate transfer tax question from the March primary ballot, but what comes next in the saga?

According to the language of the referendum, voters would have decided whether the city should move from the current flat tax model on real estate transfers to a graduated tax, which would impact all transactions of $1 million or more.

The ballot question was heavily criticized by opponents, who said the question was intended to trick voters into voting "yes" while saying the measure would have a chilling effect on real estate sales in the city.

Supporters said that the ordinance would result in a reduction in the transfer tax for approximately 94% of properties in the city.

With early voting still ongoing in the city, the city's Board of Elections has said that voting on the question will be allowed to continue, though with a caveat.

According to a spokesperson for the board, voters will still see the question on their ballots and can vote yes or no on the measure. Those votes will be sequestered for the time being however, and will not be immediately counted.

If a court order restores the question for the March 19 primary, then the votes in question would be counted. If the ruling is upheld and the question is taken off the ballot, then all votes on the matter will be discarded.

A decision on whether the Board of Elections will appeal the ruling is expected by Tuesday in a meeting for the Chicago Board of Election Commissioners.

Currently, real estate transfers in Chicago are taxed at a rate of $3.75 for each $500 of the purchase price. The new tax structure would cut that tax to $3 for every $500 of the transfer price, provided the property is sold for less than $1 million.

Any property sold over that price would be subject to higher taxes. Property valued at $1 million to $1.5 million would be taxed at $10 for every $500 in value over $1 million. Property valued over $1.5 million would be taxed at $15 for every $500 in value over that threshold, representing an increase of 400%.

A statement from the Chicago Coalition for Justice heavily criticized the decision from the judge:

“Today’s ruling, while disappointing, is not surprising. The far right has demonstrated over and over again their willingness to use the courts to disenfranchise voters and strip us of popular policies that help women, communities of color, and poor- and working-class people," the statement said.

The statement added that they were "outraged" that a "small minority of wealthy real estate interests would rather spend thousands of dollars on legal fees to preserve a brutally unjust status quo than pay their fair share in taxes."

Mayor Brandon Johnson's office issued a statement on the matter Friday evening.

"Bring Chicago Home remains on the ballot. We are disappointed in the court’s ruling, but will be exploring every legal option available. We firmly believe the referendum is legally sound and the final arbiter should be the voters of the City of Chicago," Johnson's office said.

The Building Owners and Managers Association of Chicago praised the ruling, calling the measure a "backdoor property tax" for Chicago residents.

“We are gratified in the judge’s ruling, which underscores the necessity of presenting policy questions to the public with fairness, detail, and transparency," BOMA executive director Farzin Parang said.

The Chicago Southland Black Chamber of Commerce also supported the decision, saying that the measure would damage the local real estate market.

"This victory was something that we expected and anticipated as the ballot question had several issues, namely the log-rolling issue. We also believed that the proposed ordinance would hurt both the business climate and rental market for obvious reasons," Board Chairman Dr. Cornel Darden Jr. said.

Advocates of the measure expect the decision to be appealed. More information on the proposed real estate transfer tax can be found here.