Monday, January 07, 2008

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 Chicago Boyz


Gerry from Valpo said...

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

You are welcome to migrate to the free country known as the State of Indiana whenever you are ready Carl. I will be more than pleased to give you a personal guided tour. Real estate looks like a great buy later this year too.

Dan from Madison said...

I have often wondered myself what will be Carl's breaking point to either become a cheesehead or a hoosier. I assume the transportation to the office on a daily basis is the biggest issue.

Jonathan said...

It's too bad they shut down Meigs Field. I'm not joking.