Question of the day
Wednesday, Aug 13, 2025 - Posted by Rich Miller
* As noted in this Sun-Times article, the debate over expanding the sales tax to cover services has played out ad nauseum for many, many decades. But the devil is always in the details…
For decades, Chicago mayors and their finance teams have been lobbying the Illinois General Assembly to broaden the sales tax umbrella to professional services.
The idea has gone nowhere in Springfield — even though it has a potential annual yield of $305 million for the city alone.
But that legislative losing streak didn’t stop [Chicago’s Chief Financial Officer Jill Jaworski] from making a renewed pitch to a luncheon crowd filled with powerful movers and shakers. She said the biggest reason Chicago has such a high sales tax rate is because the sales tax base is so narrow and does not include professional services.
During the 1950s, 70% of consumer spending was on goods. Now, it’s down to 50% on goods and the other half on services, she said. And that’s not including health care and housing services.
“I have a gym membership. I get a massage every month. I get my nails done. I get my hair done. I consume a lot of services. … I’m going to pay an interior decorator to help me with a couple of rooms in my house I want to redo. I pay no taxes on any of that,” she said.
“Like most people sitting in this room, I can afford to pay taxes on the activities that I engage in that are, frankly, luxury activities. And I should be paying taxes on them. I should be paying a higher percentage of my income on the … activities that I enjoy. They are a major part of our economy. … Whereas somebody who is living paycheck-to-paycheck is paying taxes on most everything they do. That is regressive, and it’s unfair.”
Taxing interior decorator services is one thing (and likely wouldn’t raise much money), but a tax on haircuts is in no way a “luxury tax” and has always been a tough one because barbers and stylists have their clients’ undivided attention for maybe a half an hour or more. And they can use that time to rail against a new tax. That sort of politicking is very effective - particularly if you’re a legislator at the mercy of someone with a pair of scissors in their hand. Same goes for car repairs, etc.
* The Question: What services would you tax and what services would you not tax? Explain.
- Jack in Chatham - Wednesday, Aug 13, 25 @ 10:55 am:
Legal, medical and real estate rentals.
- Three Dimensional Checkers - Wednesday, Aug 13, 25 @ 11:00 am:
I mean, Mayor Johnson’s campaign has $30,000 on haircuts and makeup. They never paid any sales tax on that $30,000. Think of all the money we’re leaving on the table.
- Rich Miller - Wednesday, Aug 13, 25 @ 11:07 am:
Explain and stick to the question, please. I didn’t ask for snark.
- CA-HOON - Wednesday, Aug 13, 25 @ 11:09 am:
Just to limit myself to one type of service: legal services I want taxed, but it should be progressively applied. By that I meant there should be a scale of taxation which only kicks in at, say, ~$20k spent on lawyer fees, and every ~$10k-$15k spent above that kicks in a higher level of tax, maxing out somewhere between $50k-$100k.
I would also want exceptions for specific types of cases, such as class-actions against polluters and such.
My thinking behind this is that the legal profession is serves primarily those who can afford it, and those people who can afford can also afford to pay taxes. However, the profession is also already woefully inaccessible to those with little resources, so a progressive framework of taxation should be applied so as not to keep those people out when they are already hard-pressed to find affordable representation in the legal system in the first place.
- Sue - Wednesday, Aug 13, 25 @ 11:12 am:
Jack- tenants already pay pass thru RE taxes which as you know are the highest on the planet-a sales tax on rentals would be the most regressive tax I can think of
- Give Me Break - Wednesday, Aug 13, 25 @ 11:14 am:
Tax: Haircuts, Hair Styling, Nail Salons, Lawn Services to start
Dont tax, medical dental, rehab services or adoption or background checks.
- Blue to the Bone - Wednesday, Aug 13, 25 @ 11:17 am:
I know it’s probably a non-starter, but why not have a conversation to increase the state income tax from 4.95% to something like 5.25%? Seems like it may be more feasible than trying to nickle and dime everyone with all these crazy ideas with taxing services and trying to figure out who gets taxed and who doesn’t.
- Just Me 2 - Wednesday, Aug 13, 25 @ 11:17 am:
I’d tax ads on social media platforms. Those platforms make a ton of money on those ads, and they permeate my daily life. It’s also easy for the platforms to figure out which jurisdiction to pay the tax because the ads are usually designed for a specific geographic location.
- Friendly Bob Adams - Wednesday, Aug 13, 25 @ 11:34 am:
Easiest would be business-to-business services. Toughest are people-to-people services (e.g., haircuts).
I think a service tax is a great idea in principle but I don’t have confidence Illinois could make it work.
- Steve - Wednesday, Aug 13, 25 @ 11:48 am:
I wouldn’t tax services because it’s too late in the game for Illinois on this one (without a lot of negative side effects).
- 47th Ward - Wednesday, Aug 13, 25 @ 11:55 am:
Auto repair and car washes, dry cleaning, tax prep, greens fees, lawn care would be the first things I can think of that aren’t already being taxed already (although I’m not sure that is 100% true).
Not sure how much money could be made for state/locals, but some. If you buy a washer and dryer, you pay sales tax. If you send your clothes out to be cleaned, zip. Given the changing nature of work, not likely to be a windfall there, but combined with other things, it might help.
Auto repair is tricky because it impacts low-income people a bit more than people like me. If you need your car to get to work, you have to get it fixed. So that one is more regressive in some ways. Car washes and detailing, easier to add in a sales tax.
Greens fees is one I’d have to pay, and again, it’s not the end of the world. Lawn care is like dry cleaning: buy a mower, pay the tax. Hire a company, no tax. That seems fair to me.
But even if all of these items were taxed, I have no idea how much (or how little) would be generated. Would it be enough to keep complaints to a manageable level? Hard to say. But with the exception of auto repair services, these seem politically doable to me.
- Johnny B - Wednesday, Aug 13, 25 @ 11:55 am:
Lawyers
Just kidding
that is one special interest that truly gets whatever they want
- ChicagoBars - Wednesday, Aug 13, 25 @ 12:16 pm:
Not to hijack comments but seems like good place for my question: Did COGFA, LRB, or Martire ever do a chart like this old one from South Carolina but for Midwest States showing which ones tax which services and at what rate?
https://www.scstatehouse.gov/Archives/CitizensInterestPage/TRAC/ServicesandIntangiblesSubcommittee/TableofTaxableServicesandIntangiblesbyState.pdf
I’ve poked around a bit but never found one for Midwest.
- Benjamin - Wednesday, Aug 13, 25 @ 12:24 pm:
Restaurant delivery services. DoorDash, Uber Eats, and the like are all luxuries. You could carve out an exception for deliveries fulfilled by store employees, though.
OK, I admit, this is less about the money and more personal. I’ve been burned multiple times by third-party delivery services where the delivery person just absconded with my food and the restaurant couldn’t do anything about it except refund my money, to the point where I just don’t order for delivery any more. I would hope that encouraging restaurants to move delivery back in-house would increase the quality of service.
Oh, and also raise money for the city.
- Tax And Spend - Wednesday, Aug 13, 25 @ 12:43 pm:
Let the CITY OF CHICAGO tax any and all services they deem appropriate, plus allow the CITY OF CHICAGO to install any and all taxes within the CITY of Chicago boundaries they deem appropriate.
- Dan Johnson - Wednesday, Aug 13, 25 @ 12:45 pm:
We should just do what Iowa does. (I don’t remember what Iowa does but…hard to rail against ruby red Iowa sales tax policies and I think they have 50 or so of the 80 or so possible services taxed).
- Arock - Wednesday, Aug 13, 25 @ 12:48 pm:
You are already paying a tax on services. Everyone that provides a service is paying income tax(state and federal), Social Security tax and Medicare tax on every dollar of income. If they have a place of business they are paying property tax and a tax on every utility that they use to be in business. A percentage of every dollar you spend on services goes to pay the taxes of those that provide the service. We already have a tax on tax that is ridiculous(sales tax on taxes for fuel) lets not do it again.