Chicago! Yes, it turns out that Chicago is #1. For sales tax, that is.
Following a vote earlier this week by Cook County commissioners, the city will regain its infamous status as the highest taxed municipality in the country. The sales tax boost of 1% is county wide and will increase the sales tax rate in the city of Chicago from 9.25% to 10.25%. That means that for every $1,000 you spend in Chicago, you’ll pay $10 extra for a whopping $102.50 in sales tax.
Cook County Board President Toni Preckwinkle insisted that the sales tax increase was necessary in order to head off what she called a “pension tsunami.” Currently, the county’s retirement fund is underwater to the tune of $6.5 billion. It’s estimated that the additional 1% in sales tax will generate $474 million a year.
And yes, if you’re doing the math, that would be less.
Even worse, the entire $474 million isn’t even earmarked for pensions. Only about 72% will be used to fund pensions. The remaining $133 million would be used for road and bridge projects, paying down debt and capital projects.
Chicago is already facing criticisms for its efforts to tax services streamed from the cloud. Taxing those services, like Netflix and Spotify, is expected to bring in an additional $12 million per year. Even so, the numbers still don’t add up.
The new sales tax rate – assuming that it survives suggested challenges – will go into effect on January 1, 2016.
By way of comparison, the sales tax rate in New York City, New York is 8.875% and 8% in Philadelphia, Pennsylvania. Further west, sales tax rates hit 9% in Los Angeles, California, and 9.5% in Seattle, Washington.
Of course, all of this makes me curious: What is the sales tax rate where you live?
