How Tax Incentives Publicly Finance Establishment Politicans’ Campaigns

Team TIF has long held the stance that the city is continuing to issue entirely unnecessary tax abatements for single family homes in neighborhoods that can sustain market rate construction of new homes. These abatements’ true primary function:  inflating politically connected developers’ profit margins. Further, the current use of abatements actually supports a whole ecosystem of elites that use the value of these abatements to fund their careers. I started this article around a year ago, but never pulled the trigger on it. As the campaign season is heating up and a powerful Chicago politician is now facing federal indictment for being caught playing hardball on kickbacks, I decided to return to the piece and finish it up. I think it is important for folks to understand that the idea of publicly financed campaigns isn’t a pipe dream, it’s the reality for politicians who cater to developers, banks and their attorneys. Some of you may want to bring up the “reforms” that passed, but they still allow abatement in many neighborhoods that it is entirely unnecessary. They also allow unlimited usage on multifamily builds in high income neighborhoods, while making no affordability demands in return. In other words, the “reforms” failed to do much of anything.

To help folks actually put this phenomenon into context, we’ll compare St. Louis City homebuilder gross profit margins to national averages. It will be clear that the abatements to single family homes function not to make the homes sufficiently profitable, by generally accepted national homebuilder standards. Instead, their true function is the diversion of middle and lower income St. Louisans’ tax dollars into supporting a system of privileged professionals and political campaign donations. This article will examine how the practice of giving away unnecessary abatements ends up funding wealthy law firms, developers, and politicians, while leaving city taxpayers to pick up the tab.


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