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The TIF Take



Michael Miner [Hot Type, August 25] quotes a source who says that the success of TIFs "for the general population--maybe, maybe not." She is being much too kind to the idea. As [Ben] Joravsky has reported, TIFs have caused all sorts of problems for the general taxpayer [see for a free archive of TIF stories]. The argument for TIFs depends on two fallacies.

The first, which Miner touched on, is the post hoc, ergo propter hoc fallacy. The TIFs take all the increase in property valuation for the 23 years after they are passed. But property values are increasing all over the city, not just in the TIFs.

The second is illustrated by a simple question. If Smith opens a clothing store which fits your preferences in your neighborhood, will you spend more on clothing than you would have? For most of us, the answer is "No!" The money we spend in Smith's store is money we would have spent in Jones's store. So the value of Smith's store increases, and with it the property-tax receipts; the value of Jones's store goes down--or increases more slowly than it would--and with it the tax receipts. Total tax receipts aren't changed. The subsidy merely shifts the recipient of the profits to the better-connected merchant.

This is obvious in Chicago; the city has no legitimate interest in subsidizing shopping in Edgewater rather than Uptown or Kenwood rather than Oakland. It's less obvious in the suburbs. Doesn't it pay for Skokie to have shopping done there rather than in Evanston, or Evanston to have shopping done there rather than in Skokie? Or yes, but what if the subsidies are given by Evanston and Skokie? The tax receipts are unchanged. The expenditures rise.

Frank Palmer


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