Chicago Sales Tax Hike Proposed

It is sad when two of my more depressing prophecy-type posts intersect…

Cook County is the vast county within which the city of Chicago resides, along with a large number of affluent suburbs. Cook County has a population of over 5 million and is the 2nd largest county in terms of population in the United States.

In this post from March of 2007 I discussed how a succession movement could be in the future of Cook County. Specifically, I noted how the huge expenses of maintaining hospitals was burdening the county and killing their ability to live within a balanced budget.

In this post from December 2006 I went through sales taxes, which are among the most regressive taxes in the arsenal of tax tools and the fact that Cook County and the City of Chicago have one of the highest and most unfavorable sales tax regimes in the country.

Now, in a single article in the Chicago Tribune titled “County Urged To Boost Sales Tax – City Total Would be 11% Under Plan” dated September 25, 2007 shows the likely intersection of these negative trends. Todd Stroger, the epitome of political nepotism, who campaigned on a plan to streamline the bloated Cook County work force, has done nothing of the sort and is now looking about for a revenue boost to cover the inevitable annual increases in expense growth.

The line from Mayor Daley says it all – “A sales tax is a hard pill, but how do we fund three hospitals?”

Read more

What Is Not Seen

A few months ago the Senate Democrats here in the State of Wisconsin floated a plan to provide universal health care for all residents of the state.  The first question most will ask is “who is going to pay?”  The answer is that the plan ($15bb worth) will be funded through a payroll tax.

The plan is dead in the water as the Republicans who control our State Assembly are having nothing of it, but in the next election there is the distinct possibility that the Democrats will win back the Assembly, and will then control the Governor’s chair, the Senate and the Assembly.

Read more

Better Greenery Through Tax Minimization

Hardly a month goes by without an IKEA catalog showing up on my door. For those that haven’t been to an IKEA store, they are immense “destination” stores full of low priced furniture and other household items. IKEA is famous for its “green” activities; you can hardly walk without a placard explaining the pristine source of its raw materials and how they are operating in a sustainable fashion. Here is an article from their Seattle store lauding their commitment to the environment. I’d quote from the article but it is the usual “commitment” gibberish and not particularly enlightening.

One of the core elements of the environmental movement is a huge governmental role in the economy; we need to put taxes on activities that are not viewed as beneficial and an army of lawyers and regulators to ensure that “Big Business” doesn’t run roughshod over ma’ nature. In my experience a libertarian philosophy and serious environmentalism have very little in common.

Read more

America’s Corporate Tax & Market Distortions

One of the most troubling failures of the Republican led congress (which is no more) is their failure to substantially reform the US corporate tax code. I wrote an article that summarizes how the corporate tax is applied at an overview level and the fact that today the US is among the least competitive corporate tax regimes among developed countries. The Economist recently chimed in, too, with an article titled “Tax Reform – Overhauling The Old Jalopy” which does a decent job of summarizing the situation and stating that an average tax rate of 27% without major deductions would accomplish the same thing as our current tax rate of 34%. Not mentioned by the Economist is how this backfired on us with the Alternative Minimum Tax, when a simplified tax methodology with lower rates and a broadly applied based ended up netting millions of middle Americans, including the middle class.

All of these articles miss a more troubling trend, however – the issue isn’t as much the tax methodology applied to EXISTING companies (who have strong incentives to stay in place) but how the tax impacts NEW companies that are choosing where to set up shop and what sort of structure to utilize for their business. This photo is a cornerstone of the Accenture “Headquarters” in downtown Chicago – Accenture is the surviving consulting firm from the Arthur Andersen debacle (grist for a future post as I am an alumni) that chose to locate their headquarters in Bermuda rather than the United States, primarily to minimize their income tax burden.

Read more