Thursday, March 2, was the deadline for homeowners in Chicago and the rest of the surrounding county to pay the first installment of their property taxes. It is rarely a cause for celebration, even for those, like Justice Louis Brandeis, who see taxes as the price of civilization. But on top of that, several dozen people stood outside the Cook County government building, shouting, "Pay your taxes!"
They weren't hectoring the average bungalow owner but rather one of the most prominent members of probably the city's wealthiest family--Penny Pritzker. She's the confidant and fundraising chief for Barack Obama and the heir to part of the multi-billion empire of Hyatt hotels, a manufacturing conglomerate and a now-defunct pioneer in subprime, predatory lending, among many other businesses.
It turns out, according to research released yesterday by UNITE HERE Local 1, the hotel, gaming and food service union, that she also has appealed the property tax assessment on her Chicago mansion ten times since the building was completed (covering four normal lots) in 2007 at a cost of at least $10.4 million.
Using a politically connected former county assessor for the appeals, according to Crain's Chicago Business, she successfully reduced the market value for tax purposes by 42 percent, from the assessor's original $9.6 million to $5.6 million. Two more pending appeals could reduce the assessment even further.
Already the reductions have saved her about $176,000 from 2006 to 2010, chicken feed for a billionaire but for hard-strapped schools and parks, it's a significant sum (and a bad civic example). Penny Pritzker should know something about those budget problems: She sits on the Chicago Public Schools board, and her husband is president of the park district board of commissioners. That's why the protestors outside the County Treasurer's office chanted, "Penny Pritzker/Fund our schools."
Other Pritzker family members (except J.B.) and Hyatt CEO Mark Hoplamazian have successfully pursued similar appeals—a total of 70 since 2003—that cost local government and public services more than $300,000, according to UNITE HERE.
But why was a hotel workers' union making this point? Despite selling much of their holdings, the Pritzkers still have majority control over Hyatt, which has resisted agreeing to key parts of a 2009 contract signed by other major hotels in Chicago (and is fighting similar settlements in other cities).
"This [tax avoidance] is another example of where we think the family that owns the Hyatt hotels has gone off the reservation of what's fair and just," says Local 1 president Henry Tamarin. "We're in a dispute with Hyatt Hotels corporation over treatment of both union and non-union workers, and we think this is another example of the family setting the wrong example....The problem is they're gaming the system, and they've been able to do that successfully because as the 1 percent of the 1 percent they can hire the lawyers that permit them to win and take it as far as they can go." It's not an issue of the legality of their actions, he says, but of the morality.
Hyatt "has been most aggressive in one of the key problems in the industry, increased subcontracting," says Local 1 president Henry Tamarin. Hyatt alsorefuses to accept the contractual regulation of subcontracting to which other hotels agreed. It has rejected overtime pay for more than seven days of work without a break, a rule that prohibits mandatory overtime when workers in a particular job category are laid off, and other practices accepted by other hotels, including agreements to remain neutral in some hotels where workers have shown interest in forming a union.
Many of the same workers who are squeezed at work by Hyatts and their counterparts in other businesses are hurt outside work by underfunding of skimpy public services and disproportionately burdened by taxes they can less afford to pay than the Pritzkers.
A new report from the Center on Tax and Budget Accountability says that "far from being progressive, Illinois’ tax policy is regressive, assessing much higher overall tax burdens as a percentage of income on low and middle-income families than on affluent families. Indeed, Illinois has the third highest tax burden on low income families in the nation."
The Pritzkers have a reputation for their charitable giving, but that is part as well of their gaming the system--whatever the good intentions or even results. The family empire relied repeatedly on favorable governmental deals, from tax breaks to subsidies, and exploited every loophole. But its charitable giving helps innoculate it from attack when ventures go over the line, and they are projects that glorify the Pritzkers doing things they want to do (even if there are often public benefits).
Meanwhile, they shirk their share of public responsibility and try to shortchange the people who create their wealth. "When billionaires pay less taxes, we all pay the price," says Linda O'Neal, a hotel server, homeowner, and parent of public school students. "I don't make the kind of money the Pritzkers make, but I pay my fair share of taxes. It's time for Chicago's wealthiest family to stand up and stop hurting our communities."