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Chicago, your sales tax is about to go up by one percent

Written by
Clayton Guse

The Cook County Board of Commissioners approved a measure by a vote of 9 to 7 that will increase the county's sales tax by one percent. The new rate will be 10.25 percent, making it the highest sales tax in the entire country. 

In an op-ed published in the Chicago Tribune earlier this week, Cook County Board President Toni Preckwinkle pointed out that the county's shortfall on pension obligations currently stands at $6.5 billion and continues to grow at $1 million a day. A pension reform plan has been in the works for more than two years, but after a constitutional challenge and a slew of bureaucratic red tape, Preckwinkle claims that Cook County can no longer wait.

"We can't keep kicking the can down the road," she wrote. "We can't engage in smoke and mirrors financing schemes."

Preckwinkle has not released a budget for the allocation of the new tax revenues, but promised that, during its first year, 90 percent of the new revenue will address the county government worker retirement system's shortfall. In its second year, she claimed that more than 70 percent will go toward the pension fund.

The tax increase received a good deal of pushback from several members of the Board of Commissioners. After all, sales tax is regressive—meaning lower-income taxpayers contribute a higher percentage of their income than the higher-income taxpayers. A recent report from the Institution on Taxation and Economic Policy showed that Illinois has the fifth most regressive tax structure in the nation. The poorest 20 percent of Illinois residents account for 13.2 percent of the state's tax revenue.

Commissioner Jesus "Chuy" Garcia voted yes on the sales tax increase. He took Mayor Rahm Emanuel into a runoff election in April, campaigning on a progressive agenda to fix the city and county's pension crisis. He claimed that by approving the tax increase, Cook County would be able to avoid a budget shortfall in 2016.

At the end of the day, Chicagoans, and Cook County residents in general, will have to cough up another penny for every dollar they spend in retail.

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