Illinois’ transit bailout is the gift that keeps on giving — higher taxes and fees, that is.
When the state pushed through a massive legislative package last year worth $1.5 billion annually to rescue our mismanaged, broke transit systems, the full weight taxpayers would be expected to shoulder was hard to see.
Saturday, it’s coming into focus.
On Aug. 1, the sales tax in Chicago is going up to 10.5% from 10.25%.
We have to stop and ask: How much is enough? What will it take to cover the basic functions we expect government to provide?
We are frequently bombarded with talk of revenue needs, the preferred terminology of those in Springfield, Cook County and Chicago who embrace tax hikes above reform. The cycle is as follows: There’s a budget deficit. If we don’t fix it, there will be service cuts. Oh, but we can avoid service cuts if we get more revenue. And the way to get more revenue is, unfortunately, to hike your taxes.
The sales tax hike we’re all facing is the latest rinse and repeat of this toxic formula.
What’s driving the increase? Last year’s transit rescue. As part of revenue package bailing out northern Illinois’ transit systems, rates are rising not only in Chicago but elsewhere in the region.
While Cook County’s transit portion of the sales tax will rise to 1.25%, the collar counties will see their regional transit tax portion rise from 0.75% to 1.0%.
Whew. Confused? Perhaps that’s because the sales tax you pay at Mariano’s or the local Shell station comprises multiple layers of taxation.
On most purchases in the city, you pay a 6.25% statewide sales tax, a 1.25% Chicago sales tax, a 1.75% county sales tax and a 1% RTA tax (or 1.25%, starting in August).
Before the increase, Chicago already ranked among the major U.S. cities with the highest combined sales tax rates. Beginning Aug. 1, Chicago’s combined rate will rise to 10.5%, one of the highest rates imposed by any major American city.
For those interested in keeping score, we will be tied with Tacoma, Washington; Long Beach, California; and Baton Rouge, Louisiana, while still trailing Oakland (10.75%) and (barely) Seattle (10.55%), according to the Tax Foundation.
Whether Chicago ranks first, third or sixth is beside the point. A 10.5% sales tax is still extraordinarily high by national standards. It’s why so many people relish the prospect of going shopping in lower-tax states when they can. Why buy a $200 winter coat on Michigan Avenue and pay 10.5% on top of the price when you could buy the same coat in Indiana and pay just 7%? Yet another example of Indiana embracing more competitive tax policy to attract Illinois customers.
Readers already know and appreciate how frustrating this tax can be, especially at a time when cost of living is at the forefront of our minds.
And while we recently applauded the forthcoming state sales tax holiday for back-to-school items — when the Illinois portion of the sales tax dips 5 percentage points, dropping from 6.25% to 1.25% — that 10-day window doesn’t cover everything and it won’t last long.
Here in Illinois, we like to pay more to plug fiscal holes rather than undertaking a full scale repair of what’s broken. Scratch that — we like taxpayers to pay. And pay they will, not just in sales tax but in what presumably will be much higher tolls and other hikes. All to prop up transit systems that will not be reformed enough to guarantee we won’t be back here again somewhere down the road.
We accepted the toll hikes late last year following passage of the legislation as preferable to more economically destructive tax hikes House Democrats were proposing. But we argued then — and reiterate now — our opposition to the sales tax increase, especially as transit users weren’t asked to contribute a dime in the form of modestly increased fares.
Springfield promised taxpayers more than a transit bailout. It promised reform, safer trains, better service and a modernized transit system. Will we get what we’re paying for?
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