Tuesday, February 23, 2010

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.


1 comment:

  1. Megan, nice job covering the sales tax issue.

    The attention was mostly about whether the 1% additional sales tax by Cook County will be partially repealed, right?

    How would they deal with the decreased revenue? Any proposal to keep it revenue neutral? Or additional spending cuts?

    All best,