Sales Tax Chicago Style

When I moved to Minneapolis from Chicago in the summer of 2008, I was relieved to bid farewell to what had just become the nation’s highest sales tax:  10.25% (which applies to all items, even clothing.  Food is taxed at 2.25%).  July’s 1% jump from 9.25% was projected to bring in an additional $426 million to help patch Cook County’s budget deficit.  As one might expect, local shoppers and business owners alike objected to the hike and many feared/threatened to take their purchases across the border to Du Page County, where sales tax was just over 7%.  Neither group was as sympathetic to out-of-towners, however, with Michigan Avenue shops enticing tourist by touting their rates as a bargain – compared to Europe. 

Throughout the eighteen months that I’ve enjoyed tax-free retail, Chicagoans have endured not only the increased out-of-pocket expense but also the nausea-inducing drama of county politics at impasse.  In December, after months of debate and just before an early-2010 primary, Cook County Board President Todd Stroger saw the repeal of 0.5% of his increase as commissioners finally overturned his veto on their fourth try.  What made the difference on the fourth try?  A new state law lowering the number of commissioners required to overturn a veto from 14 to 11.  In January, a lone commissioner was left hanging after not a single colleague seconded his motion to repeal the remaining 0.5%.  Earlier this month, voters sided with the commissioners when they selected all three Democratic candidates ahead of Stroger.  If elected, new nominee Toni Preckwinkle vows to repeal the remaining 0.5% of the sales tax increase.    

One of the reasons the penny-on-the-dollar sales tax has landed so much airtime is no doubt the conflicting arguments between Stroger and the pro-tax-repealers.  Stroger maintains that the revenue is crucial to continue funding public health care and suggests that those against the tax represent higher-income wards.  Some opponents point out that sales tax’s regressive nature effectively works against lower-income residents; others demand government reform and improved efficiencies.  

  

If Cook County is really concerned about supporting the lowest-income residents, it should consider exempting necessities in order to reduce the tax’s regressivity, as we do here in Minnesota.  Simply raising – or lowering – the sales tax in unlikely to attract any Chicago compromises.