Winners and Losers In Chicago's Planned Tax Hike

[Charles Worth]

While the recent major tax hike is far from certain, I am curious as what local investors think of the potential tax hike detailed in the linked article amount many others:

http://www.cnbc.com/2015/09/03/chicagos-tax-nightm...

Does it scare you out of the market?

What areas, investing types etc. are the winners and losers from this? 

From all I have read it seems like the poorer areas may be a beneficiary by comparison as politicians seem to be trying to shield those areas from bearing the consequences. Also, areas further outside of Chicago proper in Illinois which would have less exposure to Chicago pension problems. 

Any thoughts?

[Trevor Ewen]

@Charles Worth

Growing up in the Chicago area, this was something that everyone seemed to be worried about all the time. My parents were constantly waiting for Chicago's Tax Day of Reckoning. 

I think comparing Chicago to Detroit, while geographically convenient, does not really tell the business story. Chicago has an extremely diverse economy. Most people would argue that Detroit's complete lack of economic diversity was a large factor in the city's decline. Chicago does not cease to exist in the business world, if for no other reason than the sunk cost fallacy for businesses there. Also, the fact that the cost of living is already good (when compared to other cities). No one likes taxes, but when your home is half to a third the cost of an SF or NYC equivalent, you still have some incentive to stick around.

I do agree that these tax hikes are more than likely to affect the high end of the market. The same groups that find privatization of city service unpalatable will fight for more affordable housing. The mobility of people renting affordable and lower-middle-class housing is also lower, so people will stick around for longer. Even if the projection is bad, I always expect more stability on that side of the market. You just may have to deal with the occasional Illinois-style (long) eviction or two.