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Question of the day

Tuesday, Feb 4, 2014

* Perhaps the biggest news from this morning’s IMA candidates debate

Republican governor candidates Bruce Rauner and Kirk Dillard opened the door today to consideration of broadening the state sales tax to include services as part of a comprehensive overhaul of Illinois’ tax structure.

“I think it should be in the mix. I’m not prepared to say that’s the answer,” said Rauner, who added that it should be “on the table” in “looking at our entire tax code.”

Dillard, a state senator from Downers Grove, also said he was open to consideration of a broadening of the sales tax. “Maybe,” he said, adding that it would be part of a review of state taxation similar to what Rauner was proposing.

State Treasurer Dan Rutherford and state Sen. Bill Brady of Bloomington were against the idea.

* The Question: Should Illinois tax services? Take the poll and then explain your answer in comments, please.


survey tool

- Posted by Rich Miller        


41 Comments
  1. - Tom Joad - Tuesday, Feb 4, 14 @ 11:41 am:

    A tax on services would hit lower income folks disproportionately hard. Not a good idea.


  2. - A guy... - Tuesday, Feb 4, 14 @ 11:45 am:

    There are templates in other states worth taking a look at on this that open up some services to tax while mitigating other taxes. I’d consider it as part of an overall tax discussion that more appropriately taxed the “users” of services (and goods) and didn’t disproportionately affect others who choose not to or can’t afford to.


  3. - Grandson of Man - Tuesday, Feb 4, 14 @ 11:47 am:

    I voted yes, but a conditional yes because they’re regressive taxes. I voted yes because I support some service taxes along with a progressive income tax.

    I think we can now see how important revenue is to the state, and how we would set back our fiscal recovery if we let the income tax increase sunset and do nothing else.


  4. - Illiana - Tuesday, Feb 4, 14 @ 11:47 am:

    A better idea would be to eliminate the sales tax because it is regressive in practice (the less people make the higher the percentage of their income gets eaten by sales taxes) & focus revenue on our flat income tax.


  5. - Fan - Tuesday, Feb 4, 14 @ 11:52 am:

    I voted no. When does the revenue stream flatten out? Does anyone with credibility have an answer on when is enough tax money collected. The Beast constantly needs more food.


  6. - Toure's Latte - Tuesday, Feb 4, 14 @ 12:10 pm:

    Votes Yes conditionally. Basic services (energy, food) no, luxury services (luxury hotels, golf club memberships, spas) yes. Not exactly sure how what would be classed where, but it is a fair discussion to have, especially if you use luxury service taxes to mitigate basic service taxes.


  7. - Anonymous - Tuesday, Feb 4, 14 @ 12:15 pm:

    So if I pay someone to do my taxes, draw a will, visit my doctor/dentist/ etc., pay insurance, or buy sell a stock or mutual fund through a broker, they all may need to tack on a sales tax. This is a good idea how?


  8. - Precinct Captain - Tuesday, Feb 4, 14 @ 12:19 pm:

    I voted no. I don’t like the idea of taxing services at this time. I’d rather see the sales tax cut slightly and the income tax extended, potentially a raised a bit, the EITC increased, and ideally a graduated income tax.


  9. - Anon - Tuesday, Feb 4, 14 @ 12:33 pm:

    * IL ranks 47th in service taxes.

    * We have a service economy, yet IL taxes primarily the sale of goods, a shrinking sector.

    * With a broader sales tax base, the rate can be lowered.

    * Service taxes are less regressive than taxes on the sale of clothing, food and medicine. A lot depends upon which services are taxed. The working poor pays the income tax, but they can’t afford to buy many services.


  10. - PolPal56 - Tuesday, Feb 4, 14 @ 12:35 pm:

    No. This is just another regressive tax. We need to focus on progressive taxes that will work toward a more healthy wealth distribution in Illinois.


  11. - Anon - Tuesday, Feb 4, 14 @ 12:35 pm:

    I wonder what the reaction will be from the GOP base? I suspect it will be pretty negative.


  12. - Carl Nyberg - Tuesday, Feb 4, 14 @ 12:37 pm:

    Close all loopholes until the pensions are funded and a graduated income tax is implemented.


  13. - hisgirlfriday - Tuesday, Feb 4, 14 @ 12:41 pm:

    No.

    If we want a more progressive tax then let’s get a progressive income tax.

    Taxing certain services will just make lobbyists and campaign coffers richer as sales tax providers jockey to get lawmakers opposing their particular service from being taxed.

    Even if you want to say put taxes on high-end services like legal services or financial services in the name of only hurting the rich, that just totally defeats the purpose of everything else the state claims it wants to do to create jobs and will hurt big legal and financial firms in chicago.

    So what well wind up with is some B.S. tax on tattoo services or something. No thanks.


  14. - Past the Rule of 85 - Tuesday, Feb 4, 14 @ 12:46 pm:

    I voted yes, depending on services. The existing sales tax laws were started in the 1930s when the state’s economy was very different than today. The rate could be reduced and the coverage expanded. Perhaps a small “transaction” tax could be implemented. For example,$0.75/haircut.


  15. - thechampaignlife - Tuesday, Feb 4, 14 @ 12:50 pm:

    Yes, we need to broaden the base and I’d include everything, it’s a slippery slope to allow any exemptions. If implemented as revenue neutral, it should have limited impact on low income. One option is to use the revenue from a service tax to increase the personal exemption.

    Also, sales/service taxes don’t have to be regressive. A fixed dollar refund could be used. To make the math easy, say it’s a 10% tax rate with a $2000 annual refund. Someone who spends $15000 would net $500 (-3.3% effective tax rate). Someone who spends $25000 would pay $500 (3.3%). Someone who spends $60000 would pay $4000 (6.7%).


  16. - Anon - Tuesday, Feb 4, 14 @ 1:02 pm:

    == we need to focus on more progressive taxes ==

    Let´s face political realit: The graduated income tax has zero support among Republicans, and thus cannot pass. Taxing services, by contrast, has some Republican support, including from one who is the favorite to be our next governor. Consequently, we should structure extension of service taxes to focus on services used primarily by more affluent residents. Not many folks making minimum wage can afford health spas, for example. Nor can they afford to spend thousands of dollars on non-therapuetic plastic surgery.


  17. - Just Observing - Tuesday, Feb 4, 14 @ 1:04 pm:

    === Also, sales/service taxes don’t have to be regressive. A fixed dollar refund could be used. To make the math easy, say it’s a 10% tax rate with a $2000 annual refund. Someone who spends $15000 would net $500 (-3.3% effective tax rate). Someone who spends $25000 would pay $500 (3.3%). Someone who spends $60000 would pay $4000 (6.7%). ===

    So now everyone in the state needs to collect all service purchase receipts, organize them and file with their taxes. I think its a terrible idea to make income tax filing any more expensive and burdensome than it already is.


  18. - Rich Miller - Tuesday, Feb 4, 14 @ 1:08 pm:

    ===So now everyone in the state needs to collect all service purchase receipts, organize them and file with their taxes===

    I highly doubt that will ever be the case. Service taxes would be collected at the provider level.


  19. - Anon - Tuesday, Feb 4, 14 @ 1:09 pm:

    It is likely that the service providers with clout in Springfield — such as the doctors and PI attorneys — can probably protect themselves. Which means the weak service providers would get hit. Dog groomers, barber shops, cleaners…


  20. - davidh - Tuesday, Feb 4, 14 @ 1:09 pm:

    Yes, good God yes. We are long overdue to broaden the sales tax base. It should be balanced and packaged with a graduated income tax. BTW, as hedgy as Rauner’s answer was it is the first thing he’s said this campaign that comes within 100 miles of being intellectually honest…


  21. - Rich Miller - Tuesday, Feb 4, 14 @ 1:16 pm:

    ===weak service providers would get hit. Dog groomers, barber shops===

    Weak?

    Barber shops have killed off every proposed service tax in Illinois. Hardly weak.

    And, from experience, I think people will listen to their favorite dog groomers.


  22. - Anon - Tuesday, Feb 4, 14 @ 1:19 pm:

    I voted yes, but would exempt basic human needs (i.e. medical/dental services). Otherwise, tax away at salons, auto repair shops, gyms, trades, etc. While some can argue that the tax is regressive, there are ways to deal with this.


  23. - Mokenavince - Tuesday, Feb 4, 14 @ 1:38 pm:

    No it could make business people dishonest by figuring how to avoid it.

    Better yet tax hedge fund managers more.


  24. - jake - Tuesday, Feb 4, 14 @ 1:55 pm:

    I voted yes. This is actually on part of Ralph Martire’s three point plan for state solvency. One is a progressive income tax, two is broaden the sales tax to include services, and three is re-amortize the pension debt; i.e., issue bonds for the entire debt and then pay off the bonds at a level dollar amount for the life of the bonds. The last seems counterintuitive until you realize it is just what you do when you buy a house. The numbers work out that it is actually cheaper and more manageable in the long run to do it by re-amortization than according to the plan the state is now implementing.


  25. - Arizona Bob - Tuesday, Feb 4, 14 @ 2:16 pm:

    Great idea! The state has driven the trucking industry out of Illinois through ridiculous fees by Blago. It’s driven manufacturing out of Illinois by overempowering unions and a corrupt and destructive Workmen’s comp program. They’ve pretty much driven away any growing or new start up business by their overly generous public pension program and unwillingness to fund what it created in favor of pork, patronage and crony capitalist corruption.

    The only thing left is to drive out all engineering, financial service, science and technology out of the state by instituting a service tax.

    Is the better analogy for this shooting oneself in the foot or dropping into a death spiral?


  26. - Demoralized - Tuesday, Feb 4, 14 @ 2:28 pm:

    @Arizona Bob:

    If Illinois is so bad then leave (or maybe you already have if your screen name is any indicator). I grew up in this state and still live here and don’t intend on leaving anytime soon. This “the sky is falling” nonsense has to stop.

    Also, lay off the coffee this afternoon. You’re a little too worked up.


  27. - Anon - Tuesday, Feb 4, 14 @ 2:32 pm:

    == The only thing left is to drive out all engineering, financial service, science and technology out of the state by instituting a service tax. ==

    Wisconsin is one of the top service-taxing states. Yet Gov. Scott brags about his state’s economy. Why hasn’t WI’s service taxes driven out engineering, financial services etc.?


  28. - Earnest - Tuesday, Feb 4, 14 @ 2:37 pm:

    I voted to tax all/almost all. We have a serious revenue problem. I agree with many that a graduated income tax would be the preferable solution, but it’s a question of what can be achieved and when.


  29. - Capitol View - Tuesday, Feb 4, 14 @ 2:40 pm:

    we need to modernize our revenue systems. A substantially expanded sales tax on services is really just a “user fee”, as opposed to a general tax on everyone, because you only pay it if and when you use the specified service. Do it.

    The other modernization initiatives include (1)income taxes on seniors who are largely exempt, even though there is a State Department on Aging and DCFS has services targeted at grandparent care givers, etc. (2) a graduated state income tax.


  30. - Mongo - Tuesday, Feb 4, 14 @ 2:53 pm:

    Yes, all or most all services should be taxed. In many communities the service economy dominates. I provide services and candidly they should be taxed.


  31. - Phineas J. Whoopee - Tuesday, Feb 4, 14 @ 2:56 pm:

    Don’t you folks feel you pay enough in taxes? Do you really think that taxing services will help reduce other taxes? Can’t you just enjoy the few things we don’t have to pay a tax on? Too quote Chris Farley…”Oh Good Lord”


  32. - D.P.Gumby - Tuesday, Feb 4, 14 @ 3:01 pm:

    any expansion of sales tax on anything is repugnant. The only tax more regressive is the property tax. Only a graduated income tax is a fair method of distributing the burden and responsibility of funding government to those best able to pay.


  33. - LisleMike - Tuesday, Feb 4, 14 @ 3:40 pm:

    My first thought is, a service tax is a service tax. Once a particular service is exempted for any reason, it is an unfair regressive tax. Also, I can see alot of furnace repair,etc coming from neighboring states along the border towns.
    Taxation has two purposes: 1) to raise state income, 2) direct behavior (as in sin taxes)
    Let’s call it what it is, a money grab. What is a service? Is a car wash, appliance repair, auto repair, etc? I see the potential for real abuse.
    (”I will repair your washer for cash only” or similar)
    I voted no, it is an extremely bad idea and based upon those in need, not a wanted purchase.


  34. - Sunshine - Tuesday, Feb 4, 14 @ 3:57 pm:

    We’ve reduced the number of State employees quite a bit over the past five or six years but we still have a huge deficient. Our deficient is in great part caused by past practices of over promising and under paying.

    I do not support a tax on services because it will simply be one more step toward supporting additional spending, beyond what we bring in. It is simply the way we do business.

    We need to bite the bullet and cut hard on programs in all areas, and only then talk about new taxes. It will hurt me and you but folks must be made aware that looking the other way is going to cost. Perhaps then everyone will start paying attention….but, likely not.


  35. - Percival - Tuesday, Feb 4, 14 @ 5:12 pm:

    No. It is another regressive tax. We already have a whopper in the sales tax.


  36. - Cook County Commoner - Tuesday, Feb 4, 14 @ 5:35 pm:

    No. Sales taxes hit the poorest among us the hardest. It’s bad enough that we tax food and personal residences in Illinois. The world is changing, and more and more folks are finding it too difficult to pay the taxes already on the books. A well detailed progressive income tax may be the answer.


  37. - Juvenal - Tuesday, Feb 4, 14 @ 5:52 pm:

    I think broadening the sales tax in a way that is revenue nuetral in the near term, reducing sales taxes on goods, makes sense. Revenue would grow in the longterm, and it would be regressive.

    Eliminating the sales tax deduction for medicine and food and using that money to expand the EITC makes sense too.

    Do the Pritzkers really need a tax break when they shop at Whole Foods?

    That said, for a guy who has done a good job staying on the path to victory by avoiding any substance, Rauner goofed here.

    “Increasing the sales tax” is the least popular of all of the unpopular revenue ideas according to polling I have seen.

    People only really see the income tax once a year, but sales taxes every day..


  38. - Just The Way It Is One - Tuesday, Feb 4, 14 @ 7:48 pm:

    No. It’s a horrid idea in which poor to middle class folks get all the more burned. Figures, though, that the BARon would favor it, seein’ that a few extra smackers outta HIS pocket bulgin’ with Greenbacks means nothin’–not even a spit in the bucket, really.

    Yet it’s good to see that it’s now on the Record: Rauner (and Dillard) are ALL FOR RAISING your TAXES, Folks! Take note. The difference here is that it’s just a question of what KINDS of Taxes THEY’D choose to hike which hurt the Ultra-Wealthy LIKE Brucie the LEAST! Oh, but we ALL know he’d never even FATHom the thought of a FAIR, “ProGRESSive” Income Tax–you know, Bruce, the kind where the Ultra-Wealthy pay some MORE, in fairness to the rest of us middle-class and poorer Blokes–because guys like YOU have SO much of it, ya hardly know what to with yourselves!!!

    At least Dillard is honest enough (UNlike the Baron von Carhartt or Mr. Unemployment Insurance Perks’ Brady) to know that the Temporary Income Tax in place now is in OBvious NEED of Extension, at the very least, and at least DR has bitten his lip enough to HINT the same…!


  39. - Drive By - Wednesday, Feb 5, 14 @ 4:37 am:

    no.

    some have suggested taxing some services but not all. let me remind you that when our legislature decided to apply sales tax to food differently than … oh, say, candy … that they put licorice into the food column. (licorice contains wheat flour and hence is food under our rules). and they put honey covered nuts into the candy column. (contains added sugar).

    I do not want these same jokers decided what services get taxed and which don’t.


  40. - Henry Clay - Wednesday, Feb 5, 14 @ 7:18 am:

    I feel that it makes tax collection that much more confusing for most. Keep it simple. I also believe that a services tax would unfairly impact those who are least able to pay taxes such as the elderly.


  41. - Thinkn Bout Indiana - Friday, Feb 21, 14 @ 10:54 am:

    Bad Idea! Instead, Stop all pensions. Pay all political positions with a salary … then give a 100% matching 401-K. When they are out of office, we’re done paying for them. I believe Chicago is currently paying pensions for the last 7 Superintendents of Police. This is unsustainable!


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