Taxes In Chicago and Illinois

The tax situation in Chicago, Cook County, and Illinois is unsettled.

On a semi-humorous note, the City of Chicago proposed a 5 cent / bottle tax on bottled water. Apparently the goal is to reduce consumption of bottled water since it is bad for the environment (compared to tap water, I guess). The real goal of course is to raise money, and as this article from the Chicago Tribune points out, a 5 cent increase in a vending machine isn’t a big deal but on a case of bottled water a 24 pack case would go up from $3.99 to $5.19, which is effectively a 20% increase (19.4% for sticklers out there). The City of Chicago claims that this tax would raise $10.5M, which is I guess 210M bottles of water annually or about 70 for each citizen on average (I guess you need to include tourists and commuters in the calculation, so that is maybe 50 per permanent citizen. The article claims that this might create a black market in bottled water, which is plausible, and in any case it would be interesting to see if the revenue target is achieved or if people find ways to avoid it.

And another funny note is that a tax on str*p clubs (don’t want the traffic) also was thrown out by an appellate court; apparently small clubs were exempt from a tax but the city tried to apply it to these types of enterprises.

It appears for now that the proposed 2% sales tax increase (to 11%, effectively the highest in the country) is dead. This article describes the recent measures that county government are starting to consider in order to deal with these cuts, including reducing their fleet of vehicles, thinking about new fees to pay directly for services (like court fees), and some more e-government opportunities.

The city council of Chicago passed the mayor’s budget featuring $83.4M in additional property taxes over the 2007 budget. The budget also features numerous “fee” increases such as the bottled water tax listed above totalling $276.5M.

For the State of Illinois, we are still hearing about “doomsday” predictions of reduced service for the CTA due to a lack of funding. There were two previous dates listed but emergency funds postponed the day of reckoning; the latest day scheduled (fliers are up all over the city and the message drones over and over on the buses and trains) is January 20th. The CTA claims it would have to eliminate 81 of its 154 bus routes and raise fares, among other cuts. No one knows what is true or not and how much of it is posturing, but it is already growing tedious.

It is unclear what is going on with the state of Illinois. Apparently the Governor’s gross receipts tax is dead; when I google it the links return right back to this blog where I wrote about it in the first place and I can’t see any recent references to it. Here is the most recent budget article I can find… I don’t know how this solves the situation yet.

I will update the posts when I figure out what is going on with the State of Illinois and the CTA. Of course we are doing NOTHING to fix our pension situation (check the link, it is a great article, definitely a post in of itself)… since we rank last in the nation by most measures. The key is to leave the state before it all melts down, I guess.

Cross posted at LITGM

3 thoughts on “Taxes In Chicago and Illinois”

  1. “The key is to leave the state before it all melts down, I guess.”

    My advice: Don’t have an Illinois law license. It is like having your fortune in Weimar D-Marks.

    This state is so badly run you don’t know where to start.

    The key is probably the lack of an opposition party. All one-party states fall apart eventually, but only after prolonged misery. Thanks again, George Ryan, for destroying the Illinois GOP.

  2. We’ve been able to avoid a lot of the pressure to raise taxes in New Mexico, not due to the ‘brains’ operating the state, but the wisdom of old fashion principles. When the New Mexico became a state the federal act authorizing the entry stipulated that the major source of revenue generation, mining, could not be taxed and then spent, but rather it had to be invested. So for nearly a hundred years the revenue stream went into investments. While Presidential wannabe Bill Richardson can show that he has indeed been the author of two state income tax cuts [that the Democratic Party dominated state house would not grant his Republican predecessor], it has been underwritten by the leaps in the price of oil, a major portion of the state’s investment. So you have the image of Bill harping about high gas price [of course not reducing the state’s own tax at the pump] while ranking in revenue to engage in political largess. As the investments have been boons to one of the poorer states, it has also been the source of the conviction of the two prior State Treasurers [Democrat] for kickback schemes. Budget crunch or budget surplus, there will always be political hackery abound. It’s a bug, not a feature.

Comments are closed.