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Question of the day

Wednesday, Sep 28, 2011

* Sun-Times

Emanuel disclosed Wednesday that he plans to revive the most controversial idea he raised during his campaign: reducing the city’s portion of the sales tax from 1.25 percent to 1 percent, but broadening the base to include an array of services not now covered. […]

“I have to go to Springfield to do that,” Emanuel said at an unrelated news conference Tuesday. “ … I’ve talked to both the Speaker and the Senate President about lowering the sales tax by expanding what is, in fact, taxed because we tax too few things and … the working families of the city carry the burden and it’s one of the highest sales tax rates in the country.”

He added: “I wanted to do exactly what I think is the right thing: close loopholes, lower the rate, make sure other people are carrying the burden — not the working families of Chicago.”

* Crain’s

CME Group Inc. has received tax proposals from multiple states looking to lure it from Illinois, but so far, not one from its home state, CME Executive Chairman Terry Duffy said.

Nonetheless, Mr. Duffy said the Chicago-based company, which operates the biggest futures market in the country, aims to reach an agreement on a corporate tax revision with Illinois officials before the Legislature’s October veto session, or for consideration during a special session this year. […]

“I pay the most in state taxes,” Mr. Duffy said during a question-and-answer session following a speech Tuesday on business ethics at Xavier University. “Why is that? Because I don’t have a loophole. I don’t want a loophole. I want what’s fair and equitable.” […]

Mr. Duffy said he doesn’t want to set a deadline for reaching an agreement with Illinois officials because he doesn’t want to put pressure on them. But he thinks it isn’t unfair to expect an agreement to be reached within a year of starting negotiations, which began in January.

* The Question: What sorts of state tax reform could you support? Explain.

- Posted by Rich Miller        

  1. - Left Out - Wednesday, Sep 28, 11 @ 1:18 pm:

    I go for the ideas that new taxes, and Chicago needs to collect more taxes, do not have an adverse impact on the “working families of Chicago.” However, any flat rate sales tax by its very nature is a regressive tax. To make the sales tax apply to services will make it more regressive unless there are many exceptions (which would allow for abuse by any number of interest groups). I vote no on the idea.

  2. - Cincinnatus - Wednesday, Sep 28, 11 @ 1:19 pm:

    Remove all subsidies and deductions. Lower the rate.

  3. - Reality Check - Wednesday, Sep 28, 11 @ 1:25 pm:

    Amend the constitution to allow for a progressive income tax. Make the wealthy pay their fair share while holding current rates steady or reducing them for as many people as possible.

    Reform corporate taxes to make big corporations pay their fair share rather than leaving small businesses to hold the bag.

    Broaden the sales tax base statewide to include services - not just for Chicago as Rahm seems to be suggesting, which would seem logistically impossible.

    Have this comprehensive reform set to take effect in 2015 when the current rates would otherwise sunset.

  4. - PublicServant - Wednesday, Sep 28, 11 @ 1:30 pm:

    Agree w/ Reality Check

  5. - Linc - Wednesday, Sep 28, 11 @ 1:39 pm:

    We need to broaden the sales tax to cover services, a growing segment of our economy, and I’d strongly support a constitutional amendment for a progressive income tax.

  6. - anon - Wednesday, Sep 28, 11 @ 1:39 pm:

    Reality Check has got it right. My immigrant father raised us to believe in shared responsibility. I’m no Warren Buffet, but now that i’m making a bit more, I think I should be paying more to support my community. Im for a progressive income tax!

  7. - Ahoy - Wednesday, Sep 28, 11 @ 1:39 pm:

    I think reducing the sales tax and expanding it to cover more services should be a starting point.

    If this was done right, cities would benifit and the State might be able to reduce or eliminate the money sent to local governments.

  8. - D.P. Gumby - Wednesday, Sep 28, 11 @ 1:40 pm:

    Like Reality Check except would abolish sales tax and replace w/ a value added tax and, if possible, would incorporate the property tax into the progressive income tax. Not sure how that would work, but need to balance the McMansions w/ the property rich, cash poor suburban/rural imbalance.

  9. - reformer - Wednesday, Sep 28, 11 @ 1:47 pm:

    Add my vote for the progressive income tax and to expand the sales tax base to services while lowering the rate.

    Our state and local tax system is currently one of the most regressive among the 50 states. Both moves would make our tax system less regressive.

  10. - Northsider - Wednesday, Sep 28, 11 @ 1:47 pm:

    I’m another vote for the progressive income tax.

  11. - Chicago - Wednesday, Sep 28, 11 @ 1:52 pm:

    A progressive income tax is the only fair way to solve the budget problems. Sales taxes are a regressive tax on the poor.

  12. - MagLyons - Wednesday, Sep 28, 11 @ 2:03 pm:

    I agree that we need a progressive income tax. My boyfriend earns considerably more than I do and yet pays less in taxes. We don’t mind paying taxes because they pay for public services that are so essential to our way of life that we take them for granted, but the wealthy should be paying their fair share.

  13. - Dirty Red - Wednesday, Sep 28, 11 @ 2:04 pm:

    Service tax. Retirement income.

  14. - Arlingtonguy - Wednesday, Sep 28, 11 @ 2:06 pm:

    Progressive income tax and restructuring of local property taxes. Top 1 percent currently has a tax burden of 1/2 that of middle income folk.

  15. - Blue Eyes - Wednesday, Sep 28, 11 @ 2:13 pm:

    A Progressive income tax would be the best reform. It would cut taxes for about 94% of Illinois Taxpayers!!

  16. - dave - Wednesday, Sep 28, 11 @ 2:19 pm:

    I was going to write a bunch, but then I read Reality Check’s comment.

    Progressive income tax, expand the sales tax, balance the corporate tax structure by removing loopholes/incentives.

    All of this would likely mean lower income taxes for most, lower sales tax rate, lower corporate income tax rate.

  17. - TTWSYF - Wednesday, Sep 28, 11 @ 2:34 pm:

    Any service tax placed on industries where the tax cannot be passed along to the end consumer results in a business tax on many small businesses which are already struggling. Good examples are the coin operated amusement industry, car washes or Laundromats.

    These automated coin industries deal with pricing that is typically fixed in 25 cent increments. Increased costs are generally absorbed by the vendor until little or no margin exists, at which time the vendor is forced to look at a sales price increase that ranges from 25% - 100%. This huge price increase of course has a negative impact on sales volume. While the fixed costs remain the same, the only comfort to the vendor is that with the overall lower sales volume he would pay fewer taxes. But then again when he is forced to pick up his low earning equipment or close his doors, he would not have to pay any service tax.

    Additionally the State and many municipalities already charge extremely high license fees on these automated devices as well as the sales tax that is paid on these devices at time of purchase. These taxes are already being absorbed as well. I can easily see that in the case of the coin-operated amusement industry, the internal costs for a vendor to complete the filing requirements across multiple municipalities would exceed the actual tax collected in many cases. Of course the state would be able to hire some folks and give them huge pensions as additional staffing would probably be required to make sure that each municipality gets their fair share of the total tax collected. Let’s face it; the small town I live in would get about $5 each month and there are jobs and pensions to be created in collecting, accounting and disbursing this money.

    If any service tax is to be considered, then care should be taken to identify and exempt those industries that cannot pass the tax on to the consumer.

  18. - Common Sense - Wednesday, Sep 28, 11 @ 2:34 pm:

    It’s time for Illinois to enter the 21st Century - a modern state cannot survie without a progressive income tax system. With such a system we could raise more revenue and give an income tax cut to the vast majority of tax payers. The system would be fairer, more efficient, and less burdensome.

  19. - Dead Head - Wednesday, Sep 28, 11 @ 2:38 pm:

    Progressive income tax, those that can afford to pay more should.

  20. - soccermom - Wednesday, Sep 28, 11 @ 2:49 pm:

    Expand the EITC! It is an outrage that Illinois’ EITC is so stingy.

  21. - Cheryl44 - Wednesday, Sep 28, 11 @ 2:52 pm:

    Here’s another vote for a progressive income tax.

  22. - Ghost - Wednesday, Sep 28, 11 @ 3:01 pm:

    Put in a minimium tax amount a copr has to pay.

    You could elminate the federal scoial security problems if you removed the cap on social security :)

  23. - Truth Seeker - Wednesday, Sep 28, 11 @ 3:07 pm:

    The discussion should center on reducing taxes, not finding new ways to raise more. Reduce the scope of government and increase employment to expand the taxpayer base.

  24. - thechampaignlife - Wednesday, Sep 28, 11 @ 3:44 pm:

    Flat rate VAT tax with flat dollar refund. That’s how to make a regressive sales tax progressive since the flat dollar refund may be more than a low income person paid in tax, slightly less than paid in tax for middle income folks, and negligible to high earners. It’s also populist in that who can argue with the fairness when everyone pays the same rate and gets the same refund.

  25. - Bored - Wednesday, Sep 28, 11 @ 3:50 pm:

    Taxes wouldn’t need to be raised if more people were working (income tax) thus leading to more spending (sales tax). Lowering the rate looks good, but I would like some more information on what new services would be taxed.

    A Progressive state income tax would likely lead to even more people leaving the state, which is EXACTLY what we don’t need.

  26. - Jeff Park Mom - Wednesday, Sep 28, 11 @ 4:02 pm:

    Progressive income tax. My kids’s grade school is looking at another teacher layoff, state cuts to human services means we’ve got more homeless and folks with mental illness on the street, and the only way to solve this is state aid. We need more state revenue, not less, and a progressive tax is the politically smart way to get it done.

  27. - globalguy - Wednesday, Sep 28, 11 @ 4:13 pm:

    Agree w/ Reality Check - ’nuff sed …

  28. - hankster - Wednesday, Sep 28, 11 @ 4:15 pm:

    We need a modern, progressive tax system for the 21st century. A progressive income tax, because the only group of people with growing incomes are the wealthy. The progressive income tax should apply to retirement income. An expansion of the sales tax base to All services, because our economy is now more service-based than ever. Re-imposition of the sales tax on food and medicine, with a refundable tax credit to offset this hit on the poor and on working people. A way to tax internet, mail order, and other sales that now escape Illinois sales taxes, realistically with the help of the federal government to impose rules on all 50 states. These are the elements of a modern 21st century state tax structure.

  29. - Jean Wittman - Wednesday, Sep 28, 11 @ 4:20 pm:

    A progressive income tax where people pay income on what they make is what needs to be proposed. The rich pay more and the rest of us get a break!

  30. - Responsa - Wednesday, Sep 28, 11 @ 5:32 pm:

    As bored said so well, what we need is more people earning income in order to collect more income tax revenue, and more people able to buy things which generates more sales taxes. What we don’t need are new tax schemes and higher taxes on anybody. If retirement earnings are taxed, Illinois will lose population immediately–that is a given–including lots of the folks whose state pensions are a big part of the reason the state is in trouble. The state would still owe them their pensions wherever they live, but would no longer get the benefit of other taxes (sales, property, etc.) they pay in the state.

    The only service taxes I could consider are for certain currently untaxed professional services–such as barber and hairdresser, spa, health club, dog grooming, accounting, and architectural, for example.

  31. - 1776 - Wednesday, Sep 28, 11 @ 7:13 pm:

    I’m not quite sure where to begin except to provide an educated guess that the vast majority of posters today have never owned a business or had to meet a payroll.

    I’d love for anyone to define what “pay their fair share” means despite the current favorite phrase of liberals.

    Creating a graduated income tax means a tax hike for small and medium-sized companies who file at the individual rate (subchapter S corps, LLCs, partnerships, etc.).

    Companies don’t “pay taxes.” They are forced to raise prices for food, gasoline, clothes, and their products in order to meet their tax burden and other regulatory costs.

    Many posters and media stories have focused on the percentage rather than the tax bill. Let me be clear - the so-called “wealthy” pay substantially more in taxes. Three percent of $250,000 (Obama’s definition of millionaire in his proposal) is $7,500 in taxes under Illinois’ rate. The secretary earning $50,000 has a tax bill of $1,500.

    While the “wealthy” individual may get to claim a mortgage deduction, that means they own a home and pay property taxes. The low income person gets the same deduction. Same for dependent deduction and others. These “loopholes” are not created only for the wealthy.

    These “wealthy” individuals pay more in property taxes and sales taxes while generally consuming less of the state’s services generally. They don’t get food stamps, free lunches, day care help, and other social services and yet they pay for it at a much greater rate than others.

    I get it and understand the need for these services. But don’t sit and complain about people and businesses not paying their fair share. Most business operate on a margin of 2-3 percent.

  32. - Reality Check - Wednesday, Sep 28, 11 @ 8:33 pm:

    1776 claims “wealthy individuals don’t get social services yet they pay at a much greater rate than others.”

    Both claims are false.

    In Illinois, the higher one’s income, the lower one’s total effective tax rate. Our tax structure is upside-down.

    And everyone derives the benefit of those social goods and services we purchase through taxation, including public safety, roads and bridges, clean air and water, an educated citizenry (and workforce), and much more.

    Finally, while 1776 seems to claim that rich folks don’t derive any benefit from public spending on safety net programs, the fact is that state taxes support care for the disabled, mental health treatment, substance abuse and domestic violence services–none of which discriminate on the basis of wealth.

  33. - truthteller - Wednesday, Sep 28, 11 @ 8:55 pm:

    Amend the constitution to allow for a graduated income tax.
    Impose a financial transaction tax.

    Tax hedge fund managers and capital gains at a rate equal to the difference between the federal earned income top rate and the capital gains rate.

  34. - gg - Wednesday, Sep 28, 11 @ 9:28 pm:

    From gg

    The “progressive taxpayer’s” already have addresses in Florida.

    Please get a clue.


  35. - gg - Wednesday, Sep 28, 11 @ 9:46 pm:

    Free on my own

    That’s the way a used to be.

    Since I met you, loves got a hold on me.

    Alvin Bishop

Sorry, comments for this post are now closed.

* Reader comments closed until Tuesday
* *** UPDATED x1 *** Tribune asked 16 mayoral candidates to release tax returns, 6 complied
* A rough idea of what they're looking at
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* *** UPDATED x3 - Morrison wants emergency meeting of ILGOP - McConnaughay explains - Schneider responds *** Rauner says he tried to drop out of race after primary
* Feds re-raid Ald. Burke's office
* Yesterday's stories

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