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* As we’ve discussed several times before, several businesses have opened up “sales offices” in Downstate counties to avoid paying high local sales taxes in Cook and DuPage counties. Chicago, Cook County and the RTA defeated a bill earlier this year which would codify these havens into state law, but they failed to pass their own bill to kill the practice entirely. A Downstate judge ruled against the state’s efforts to collect unpaid sales taxes earlier this year, but the state is appealing.
Things are really heating up…
Chicago Mayor Rahm Emanuel’s office said late Friday that the city plans to file a lawsuit early next week against Kankakee and Channahon. “There is money that should be going to Chicago that is going to other cities,” said Chris Mather, a spokeswoman for Emanuel. […]
Just how much money is at stake is hard to track. Kankakee, which observers think has the largest program, reported paying companies about $125 million in sales-tax rebates between 2002 and 2010, but if those sales had taken place in higher tax venues, they easily could have generated double or triple that amount. […]
Within the next week, as many as eight suburbs that are home to Plass Appliance & Furniture showrooms are expected to jointly send a letter to the Revenue Department, asking for a ruling on the company’s routing of sales through Channahon, said Martin Bourke, village administrator for Bloomingdale, a DuPage County suburb.
The retailer stopped paying taxes to Bloomingdale in January 2008, and the village estimates it has lost nearly $100,000 in that time. Plass executives did not respond to requests for comment.
* In other business/tax related news, Crain’s editorializes against state tax incentives for big companies…
The sale of Motorola Mobility Holdings Inc. to Google Inc. is interesting in many ways, not least for what it tells us about the effectiveness of state tax breaks for big employers.
The message: Subsidies such as those Illinois granted Motorola earlier this year count for little in an age of rapid-fire corporate consolidation. Corporate executives who negotiate tax breaks in exchange for promises to keep jobs in the state can easily turn around and sell the company to a buyer who places less value on the subsidies.
Gov. Pat Quinn gave Motorola generous payroll tax breaks in return for continuing to employ thousands in the state. A few months later, the Motorola execs who negotiated that deal agreed to sell their company to a California-based acquirer with little reason to care about Illinois jobs. Moving or eliminating those jobs might make financial sense to Google, even if it means sacrificing the subsidies. After all, Google is much bigger than Motorola, with different strategic objectives.
I don’t necessarily disagree. I do wonder, however, what the publication’s editorial board would’ve written had Motorola Mobility announced it was moving away earlier this year.
* Meanwhile, is the exodus to exurbia dead? It appears so, at least for now…
Between 2000 and 2010, Kendall was the fastest-growing county in the United States, with a growth rate of some 110 percent, according to the Census Bureau. In the Chicago area, Kendall was not the only faraway land of big dreams. Population soared, too, in distant suburban Kane, Will and McHenry Counties. Even in DeKalb County, tall-corn country nearly halfway to Iowa, newcomers were drawn by visions of castles on a cul-de-sac.
Now real estate experts say these far-flung housing developments are among the hardest hit by the housing downturn. In Yorkville, with a population of about 18,000, at least 10 subdivisions sit unfinished, with little sign of development soon.
“The Chicago region has been one of the hardest-hit markets in the country,” said Erik Doersching, the executive vice president of Tracy Cross & Associates, a real estate analysis firm in Schaumburg. “And the outlying areas are the most impacted.”
In 2009 and 2010, the top foreclosure rates in Illinois were in Kendall, Kane and Will Counties. On the new suburban frontier along the farthest fringes of the Chicago region, where cheap land and rising prices once triggered a rush of buyers, some newer developments have become ghost towns in places like Yorkville, Frankfort, Sugar Grove and Hampshire.
* And speaking of exurbia, a proposed toll hike would put us above some states, but not too far out of line with the rest of the country…
Currently, the tollway, which encompasses 286 miles of road, charges about 3 cents a mile for I-PASS customers in passenger cars.
On average, drivers in passenger cars using electronic tolling on the 157-mile Indiana Toll Road also pay about 3 cents a mile. On the 241-mile Ohio Turnpike, the toll average is 4.2 cents a mile, while further east, the Pennsylvania Turnpike charges 7.7 cents a mile and the 138-mile Massachusetts Turnpike levies 9 cents a mile.
The Illinois tollway’s average would go to 6 cents a mile under the new proposal, but an individual’s cost increase could depend on his or her specific commute. The tollway’s plan proposes toll hikes of 35 cents at 40-cent plazas, 45 cents at 50-cent plazas, and increases at ramps ranging from 15 cents to 45 cents.
So, that would mean an I-PASS customer commuting daily from Arlington Heights to Lombard on I-355 and using tolled access ramps would pay $1.35 more a day, or $337.50 a year, assuming two weeks of vacation.
* Related and a roundup…
* Ominous lack of news on McPier labor talks
* Morris raises good questions in debate over tollway tolls
* Press Release: Governor Quinn Signs Bill to Reduce Transportation Costs for Illinois Businesses - New Law Modifies Truck Weight Limits to Increase Efficiency on Short Trips
* Kadner: This man doesn’t like deal that cuts electric rates
* Darin: The Smart Grid - A Better Forecast For Reliable Power and Clean Energy Jobs
* Regulators unfairly revoking medical licenses, lawsuits charge
* State health insurance decision up to judge - Otwell to rule by October on challenges by insurance companies
* Illinois scientific surveys hit funding roadblock
* State cuts in writing and cursive requirements worry some suburban parents
* University Center of Lake County copes with 66% funding cut
posted by Rich Miller
Monday, Aug 22, 11 @ 11:08 am
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This will really do wonders for Chicago-Downstate relations and help to quell the conspiracy theories. Not.
Comment by just sayin' Monday, Aug 22, 11 @ 11:36 am
Has this loophole been closed by legislation?
Comment by Cincinnatus Monday, Aug 22, 11 @ 11:50 am
Cincinnatus, as noted above, the answer is “No.”
Comment by Rich Miller Monday, Aug 22, 11 @ 11:52 am
I think the Mayor has a great idea. Let’s sue Florida over Jimmy Johns! And if Google moves Motorola to California, we’ll sue California. And get a temporary restraining order on the governors of Indiana and New Jersey to stop them from advertising to lure businesses out of state.
Comment by Pat Robertson Monday, Aug 22, 11 @ 12:02 pm
I think it was meant more as a comment on the frivolous nature of the suit more than as a question. Just like so many things in the state, too many laws, too many unintended consequences, too many shenanigans as our elected officials selectively choose which to follow…
Comment by Cincinnatus Monday, Aug 22, 11 @ 12:08 pm
Just an observation here, but if the City and Cook County didn’t treat the business community as a personal piggy bank things might be different. A lawsuit for doing something completely legal (moving a business to a more favorable tax climate - be it Kankakee or Indiana…) won’t survive the light of day.
Comment by Commonsense in Illinois Monday, Aug 22, 11 @ 12:19 pm
===doing something completely legal (moving a business to a more favorable tax climate - be it Kankakee or Indiana…) ===
This isn’t about moving an entire business. It’s about setting up a one-person shop with a Fax machine and calling it a “sales office” in order to avoid taxation.
Comment by Rich Miller Monday, Aug 22, 11 @ 12:27 pm
This is about smart businessmen taking legal advantage of a glaring loophole in an overly complicated tax structure to avoid the outrageous additional tax burden imposed by the bureaucratic nightmare that is Chicago.
Comment by Cincinnatus Monday, Aug 22, 11 @ 12:45 pm
===in an overly complicated tax structure===
I don’t get that. The sales tax is pretty straight-forward here.
Comment by Rich Miller Monday, Aug 22, 11 @ 12:46 pm
Ironically, it looks like the companies have taken a simple process and deliberately introduced lots of legalistic ambiguity.
Comment by Rich Miller Monday, Aug 22, 11 @ 12:49 pm
As if Kankakee doesn’t have enough probablems already. The county is in shambles, the taxes are one of the top 100 in the country prior to this. It has been mismanaged. The REPUBLICAN leaders there now want a big bond issue so that they can get a new county center. They don’t want a race track, landfill, or any other economic stimulus just small shops to siphen from Chicago sales tax. It makes sense. Blah!
Comment by K3_Spfld_Chi Monday, Aug 22, 11 @ 1:01 pm
Oh, I do so love feisty little Mayor Emanuel…take that downstaters who feel that Chicago gets too big a piece of the pie…if it wasn’t for Chicago, you’d be in a much worse place…teach ‘em a little respect Rahm…
Comment by Loop Lady Monday, Aug 22, 11 @ 1:12 pm
- This is about smart businessmen taking legal advantage of a glaring loophole -
I love how you conservative purists see these tax dodgers as heroes.
Comment by Small Town Liberal Monday, Aug 22, 11 @ 4:02 pm
One silver lining of the recession is the slowdown of converting forests and productive farmland into McMansions and tract housing. That, and real estate agents and mortgage brokers puffing out their chests a little less. The real estate crash has cost a lot of jobs but I have to look for the bright side somewhere.
Comment by Independent Monday, Aug 22, 11 @ 4:27 pm
The City of Kankakee legal masterminds of this tax scam plan are the same scholars who fought a longtime legal battle with their own county over siting a city landfill in the county. The City lost. Big taxpayer dollars spent.
The tax kickback program has always seemed fishy. If legal, it probably won’t be for long. Kankakee’s longtime clout is in Terre Haute.
Comment by x ace Monday, Aug 22, 11 @ 6:43 pm
Although I find this practice totally disgusting, how is this practice any different than Boeing setting up offshore tax havens to get out of paying taxes in the U.S.?
Can Rahm sue them too while he’s at it?
Comment by hisgirlfriday Monday, Aug 22, 11 @ 8:48 pm
Channahon and Kankakee are NOT “Downstate” to me. They’re Chicago.
Comment by JoePeoria Tuesday, Aug 23, 11 @ 7:32 am
- Small Town Liberal - Monday, Aug 22, 11 @ 4:02 pm:
“I love how you conservative purists see these tax dodgers as heroes.”
I love how you never bring anything to the party…
Comment by Cincinnatus Tuesday, Aug 23, 11 @ 9:45 am