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Question of the day

Thursday, Jul 17, 2014

* Aside from the fact that Bruce Rauner’s new plan to tax services won’t come anywhere close to replacing the income tax hike revenues and won’t allow him to justify freezing property taxes, do you generally support or oppose a tax on services? Take the poll and then explain your answer in comments, please.


survey solutions

- Posted by Rich Miller        


55 Comments
  1. - Just Saying - Thursday, Jul 17, 14 @ 1:59 pm:

    A well-thought out service tax (designed to have the least impact on low income earners) seems more reasonable and politically feasible than raising other taxes. While I agree you can’t implement this AND expect to be able to turn back the past tax increase, the service tax alone can certainly be one of the many changes we need to lower the red ink.


  2. - OneMan - Thursday, Jul 17, 14 @ 2:02 pm:

    Reasonable service taxes do not seem out of place to me.


  3. - Bunson8r - Thursday, Jul 17, 14 @ 2:03 pm:

    I generally think taxing spending a little more and income a little less is a better method to generate revenue, so I could get behind a modest tax on services.


  4. - downstate commissioner - Thursday, Jul 17, 14 @ 2:07 pm:

    Probably is a good way to bring in some more income, but because it is a new tax, and will probably result in more bureaocracy (sic) voted my pocketbook-no…


  5. - wordslinger - Thursday, Jul 17, 14 @ 2:08 pm:

    Generally support, with a caution against services of necessity to low-income households.


  6. - boat captain - Thursday, Jul 17, 14 @ 2:15 pm:

    Would rather see the income tax stay as it is. A service tax will harm the lower wage earners.


  7. - 47th Ward - Thursday, Jul 17, 14 @ 2:15 pm:

    Illinois has a service-based economy and we should have a modern tax system that reflects that.


  8. - john doe - Thursday, Jul 17, 14 @ 2:15 pm:

    Good idea. Most states tax at least some services.Maybe we should tax SOME retirement income-on higher income people.


  9. - Stormfield - Thursday, Jul 17, 14 @ 2:15 pm:

    The challenge is that consumption taxes are by their nature regressive, as lower income persons tend to spend a greater percentage of their income than higher income persons. I’m also not a fan of creating disincentives to spending.

    Still, I would support a services tax because the state needs revenue, and this is a broad-based and hopefully politically possible way to get more revenue.


  10. - Archiesmom - Thursday, Jul 17, 14 @ 2:16 pm:

    Generally oppose because of the regressive nature of sales taxes, and the fact they will not be deductible for Federal purposes. Have some cojones and tax income progressively, with a surcharge for incomes in excess is a million.


  11. - Oswego Willy - Thursday, Jul 17, 14 @ 2:17 pm:

    Generally support, but only if reasonable goals of fiscal balance is met with those, or any service taxes. If adding them.


  12. - 47th Ward - Thursday, Jul 17, 14 @ 2:17 pm:

    ===A service tax will harm the lower wage earners.===

    Maybe, maybe not. Today, if I drop my shirts off to be pressed, I don’t pay a service tax for that. If I instead buy an iron to press my own shirts, I have to pay sales tax on the iron and ironing board.

    That’s the current system. How fair is that to poor people?


  13. - jake - Thursday, Jul 17, 14 @ 2:17 pm:

    Voted yes. Note that this is one of the three components of CTBA formula for fixing the budget: 1) progressive income tax, 2) broaden the sales tax to include services, and 3) amortize the debt; i.e., issue bonds for the entire amount and pay them off with level annual payments, just as you do for a fixed-rate housing mortgage. Actuarially and economically sound, and just plain common sense.


  14. - Mason born - Thursday, Jul 17, 14 @ 2:19 pm:

    We need the revenue the main growth is in services makes sense to look there.


  15. - Goooner - Thursday, Jul 17, 14 @ 2:19 pm:

    This would create huge new headaches and accounting issues for those parts of the economy.

    When we are struggling to recover, it would seem best not to add new burdens.

    Also, it is interesting that Rauner, rather than advocating for a constitutional amendment for a graduated income tax that would make people like himself pay, has found a way to make others pay.

    That’s not the leadership we need.


  16. - olddog - Thursday, Jul 17, 14 @ 2:19 pm:

    Voted yes. But it will have to be part of a complete overhaul of the tax laws, including a progressive income tax.

    (Yep, I said “will” and not “would.” Unless we put a graduated income tax on the table, we’re just shadow-boxing. Sooner or later, we’re going to have to come to terms with that.)


  17. - Grandson of Man - Thursday, Jul 17, 14 @ 2:22 pm:

    I agree with Just Saying, and I voted yes.

    Service taxes can help plug the revenue gap, as well as spending reductions, legal pension reform and ideas like a progressive income tax or restoring the 5% income tax.

    What about fracking and legal marijuana? Those can be two sources that would help our economy and budgets. I think that any talk of taxation should also include non-coercive means to raise revenue.


  18. - walker - Thursday, Jul 17, 14 @ 2:24 pm:

    Support.

    This ain’t a hole, it’s a cavern.

    We can make a list of all the things that we can reasonably do to generate more state revenue, plus all the things we can reasonably do in cutting state expenses and services, and only with all of them combined will we have a chance to meet the financial challenges we face.

    So yes, I am for most all serious proposals on either side. No tradeoffs, (like more service tax - less income tax), are arithmetically possible. If anyone thinks they are, show us all the real numbers. Time long past to stop fooling ourselves. When we are closer to fiscal health we can fine-tune based on our ideological bents.


  19. - Jimbo - Thursday, Jul 17, 14 @ 2:25 pm:

    I support it only if coupled with a reduction in the sales tax. I would be okay if it was still a net gain overall, but some relief must be given to the poor hardest hit by the sales tax in exchange for hitting the rest of us with service taxes.


  20. - Formerly Known As... - Thursday, Jul 17, 14 @ 2:26 pm:

    imho, it depends entirely on whether any new tax for services is accompanied by a reduction in other taxes.

    We already have a high state sales tax. State income taxes recently jumped significantly. Local property and sales taxes continue increasing.

    As an “add-on”, no. As a “replacement”, possibly. Kudos to Rauner for putting some specifics out there.


  21. - Cook County Commoner - Thursday, Jul 17, 14 @ 2:29 pm:

    Oppose. The business climate in Illinois is handicapped enough as is. Illinois needs to attract and encourage businesses, not put up another stumbling block.


  22. - JS Mill - Thursday, Jul 17, 14 @ 2:30 pm:

    I voted yes and agree with Jake. As currently constructed our tax base is decreasing, we are no longer a manufacturing-based economy. That said, we need to find a mechanism to stop the growth of governmental spending or, at least, stop the growth of “new” programs and spending mandates. That would allow the new revenue to be used for the purpose of reducing the structural debt. Conservatively, a 1% service tax could raise $3-$4 billion dollars annually. If true the back log of bills could be erased in two years time. The suspicion held by most people that I have discussed this concept with is the the ILGA will spend it as fast as they get it. I cannot disagree with that concern.


  23. - Down South - Thursday, Jul 17, 14 @ 2:30 pm:

    The entire Rauner proposal is worth reading. I have scanned it and it seems that the services tax proposal is only one facet of a more complex and interesting set of ideas.

    I am beginning to believe that it would be interesting to see Rauner have an opportunity to bring about change.


  24. - haverford - Thursday, Jul 17, 14 @ 2:32 pm:

    I voted yes. But, like many before me, I think it needs to be carefully thought out so that - like the sales tax - is isn’t overly burdensome on those that can least afford it.

    So car repair, nope. But (non-medical) massages, etc. absolutely.


  25. - Makandadawg - Thursday, Jul 17, 14 @ 2:32 pm:

    Yes: The tax on services would better reflect our state’s economy providing a broader base of people and transactions to generate needed revenues. Also if I buy a new car, I pay sales tax on the whole cost of the car including the labor costs. If I have my car repaired, I just pay tax on the cost of the parts and the labor is not taxed. Just makes more sense to me.


  26. - a drop in - Thursday, Jul 17, 14 @ 2:37 pm:

    Don’t connect this with income or real estate taxes. If we have a service tax, lower the state sales tax.


  27. - Skeptic - Thursday, Jul 17, 14 @ 2:44 pm:

    Supported. I keep reading that we’re in a “service-based” economy. Seems to me that taxation should be in tune with the economic model we’re living under. Which is why property taxes aren’t as effective as they used to be.


  28. - lake county democrat - Thursday, Jul 17, 14 @ 2:45 pm:

    Generally oppose - I’d rather have more revenue through progressive income taxes - taxes on services may not be as regressive as sales taxes because richer people might make more use of “services” broadly speaking than others, so I’m open to persuasion.


  29. - Responsa - Thursday, Jul 17, 14 @ 2:49 pm:

    Reluctantly, yes. These are obviiusly new consumption taxes, but it’s much easier for people to make choices about whether or not, and when, to buy the products/services on this list today than it is to make the choice not to pay income tax. The idea that most of these are necessities of life and will hurt the poor more than those more well off is balderdash. Take the politics out of it for a sec and do the math with your own income and your own past use of these products and services.


  30. - dupage dan - Thursday, Jul 17, 14 @ 3:04 pm:

    I can see it now. Young folks out hustling for some extra cash by mowing lawns and shoveling sidewalks are gonna run afoul of the tax man. The news pieces’ll write themselves.

    Ok, snark aside - carefully crafted in recognition of a shift on how money is made in Illinois, this could work well.

    As an aside, there are thoughts about changing the way motor vehicles are taxed that recognizes that high MPG vehicles/electric cars are paying less/nothing for similar road usages and not paying a fair share of the cost to build/maintain those roads. I am one of those drivers. My cars get very high mileage as TDI diesel engine driven cars. I sip fuel. I drive a LOT. I should pay more. Do I want to? #&!! no. But it would be fairer, nonetheless. Same with taxes on services. Fairer because those with more money typically use more paid services and will pay more.


  31. - Andrew Szakmary - Thursday, Jul 17, 14 @ 3:10 pm:

    I voted yes. As a matter of sound tax policy, broadening the base and lowering the rate is generally good, as it results in fewer distortions of economic activity. I get that in this case it will be used as an excuse to raise taxes overall, but that will almost certainly have to happen anyway if the state is to pay its contractual obligations and still provide a decent level of public services.


  32. - walker - Thursday, Jul 17, 14 @ 3:23 pm:

    Any strong apolitical CFO in Rauner’s world, will tell him that he has to raise more service taxes, and keep the current income tax rates, and better rationalize and cut tax incentives to large businesses, and restructure some payables, and set a hard and lower spending limit, and shift some pension costs to local entities over time, and do about ten other difficult things to have a chance financially.

    This is beyond simplistic political wishes for leaning one way or the other, or for easy tradeoffs.

    Find that CFO Rauner, and listen! Then you would be bringing some of the right skills along with you to this job.


  33. - walker - Thursday, Jul 17, 14 @ 3:24 pm:

    OK I’m done ranting. Sorry.


  34. - Bogey Golfer - Thursday, Jul 17, 14 @ 3:25 pm:

    Voted ‘yes’. We are overtaxing sins (cigarettes, alcohol, gasoline (some think this) that we are cutting back on these sins to the point where we are not taking in enough revenue to fund the level of government we want. While some services are needed, others are a want and should be taxed accordingly. Better than just increasing income or property taxes.


  35. - Springfield Outsider - Thursday, Jul 17, 14 @ 3:27 pm:

    Let’s see, I have a small “service” business and I pay taxes now…if there is a new tax on my services, I will simply pay more taxes…in addition I will have a whole new pile of paperwork. I would only support this concept if lawyers, accountants and doctors all have to pay that same tax and do the same paperwork. Frankly, I’d rather just pay more in “regular” taxes.


  36. - Anonymous - Thursday, Jul 17, 14 @ 3:29 pm:

    Im with Haverford! Manicures YES coin operated laundry NO. I remember using those and that’s just mean. That’s not a service that is a chore.


  37. - DuPage - Thursday, Jul 17, 14 @ 3:43 pm:

    Oppose. Small service businesses, small contractors, and other employees paid on a 1099 will have myriad extra paperwork to do. Also, to be competitive, they might end up absorbing some or all of the tax and the extra paperwork and recordkeeping expenses.


  38. - Perry Noya - Thursday, Jul 17, 14 @ 3:47 pm:

    Just Saying: What do you think are the odds that the General Assembly would pass a “well-thought out service tax”?


  39. - Responsa - Thursday, Jul 17, 14 @ 3:47 pm:

    ==coin operated laundry NO. I remember using those and that’s just mean. That’s not a service that is a chore.==

    Apparently Rauner agrees with you that “it’s mean” since he did not include coin operated laundry as services that he’d tax..


  40. - Keyser Soze - Thursday, Jul 17, 14 @ 4:39 pm:

    Depends on the service to be taxed. Plumbers making a house call?, Self-employed hairdressers? Criminal defense lawyers? Tree trimmers? Architects? This is going to be sticky.


  41. - Anon - Thursday, Jul 17, 14 @ 4:44 pm:

    It’s simply modernizing the tax code to take into account the vast shift in consumer purchasing. Do it.


  42. - Robert the Bruce - Thursday, Jul 17, 14 @ 5:13 pm:

    Support. This progressive idea to raise taxes especially on a lot of business-to-business services, is appealing.

    I find it hard to be against taxing gold club membership fees (chart on p.9 of Rauner doc)


  43. - Robert the Bruce - Thursday, Jul 17, 14 @ 5:13 pm:

    golf not gold.


  44. - Mama - Thursday, Jul 17, 14 @ 5:31 pm:

    Freezing property taxes = Freezing out public schools! The children will be the ones who lose! If you can’t afford property taxes, do not buy a home!


  45. - Mama - Thursday, Jul 17, 14 @ 5:39 pm:

    If it is legal, tax all sales via the computer! Most the younger gens do not go shopping. They buy almost everything by computer. It is a big lost of sales tax revenue for IL.


  46. - Kerfuffle - Thursday, Jul 17, 14 @ 6:14 pm:

    Mama===If you can’t afford property taxes, do not buy a home!====

    I guess you don’t see that proprty owners just pass on property tax increases to their renters. It has nothing to do with home ownership. Give me a break!


  47. - foster brooks - Thursday, Jul 17, 14 @ 6:42 pm:

    I support it. I can change my own oil,wife can cut my hair.


  48. - Redux - Thursday, Jul 17, 14 @ 6:43 pm:

    Oppose. It’s regressive. It does not encourage small service providers to start or grow businesses in Illinois. The cost of services are just going to be passed along to consumers, as if the cost of living in Illinois isn’t discouraging enough. It will cost the state much more to enforce and police than a straightforward progressive income tax. If raising taxes on corporations is anti-business, why is creating a new tax for small consulting firms or car repair shops pro-business? I thought he said yesterday his #1 priority was job creation. Small service provider businesses already pay taxes and have a ton paperwork.


  49. - Sunshine - Thursday, Jul 17, 14 @ 7:03 pm:

    Oppose. Get our house in order first with meaningful cuts then I might support more taxes.

    I just don’t trust giving more on the tax side without a bit more of shared pain on the spend side.


  50. - Soccertease - Thursday, Jul 17, 14 @ 9:05 pm:

    No. We already have a service occupation tax that taxes the coat of any tangible personal property related to the service performed.


  51. - Walter - Thursday, Jul 17, 14 @ 11:20 pm:

    A tax on services should not extend to services to the manufacturing sector.


  52. - Anonymous - Friday, Jul 18, 14 @ 1:05 am:

    the poor can service the rich by paying more taxes (jack-up the luxury tax)


  53. - Anonymous - Friday, Jul 18, 14 @ 8:03 am:

    tax parking spaces too?


  54. - SkepticalCal - Friday, Jul 18, 14 @ 8:32 am:

    This proposal is already doomed in the planning process. The difference between services to be taxed and those to be exempt makes no sense. It will face a successful challenge that it denies equal protection.
    For those who hate intrusive governmental regulation, this will be an accounting nightmare for many businesses, especially small ones.
    Big Jim Thompson floated this idea and learned the hard political and legal lessons that spell defeat. So Rauner needs to have a Plan B.


  55. - Federalist - Friday, Jul 18, 14 @ 8:47 am:

    If the service tax is just another added tax on the existing tax to fund that area of serive then I would oppose it. It if is to reduce that existing tax and then use the service tax to make up for it, probably would support it.

    No end taxes and how they can constantly be escalated with minimal warning. A quagmire for any politician who strongly supports them.


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