By Ted Dabrowski and John Klingner
Opponents of the Cook County pop tax aren’t just celebrating the official end of an unpopular tax. Many also believe that the public’s explosive reaction could finally slow the pace of constant tax hikes in Chicagoland.
Even Moody’s Investors Service came to that conclusion in a recent report, saying: “The political backlash against the unpopular soda tax highlights the practical limitations on raising taxes, even if a government is legally permitted to do so.”
Unfortunately, the facts on the ground tell us that’s an overly optimistic and naive reading of the situation on both Chicago and Cook County. Residents are still dealing with a set of tax hike-addicted local governments that are very skilled at getting what they want. Cook County and Chicago, including all its sister governments, are drowning in debt. And politicians at all levels of government are unwilling to enact major spending reforms or bankruptcy laws,
In that environment, Cook County residents should expect officials to push for more hikes – whether in the form of taxes, fees, fines or fares.
In fact, at the very moment that the Cook County Board repealed its $200 million pop tax, the Chicago Public Schools publicly announced it was hiking property taxes by another $225 million. Politicians were able to impose one $200-million tax hike just as another one was killed.
What’s fascinating about that “swap” in taxes is the property tax hike should have sparked even more outrage than the soda tax. Property tax hikes are far more punitive to residents than pop taxes.
And yet the property tax hike sailed through with little opposition.
County residents could have avoided the pop tax by simply rejecting soda purchases. Or they could have just crossed the county border to buy the product. Yes, the tax hike was unfair and damaging to retailers, but county residents could have avoided it.
On the other hand, Chicago homeowners and renters can’t avoid property tax hikes. Not unless they want to lose their home or get evicted. Even worse, high property taxes are squeezing people out of their homes. Residents are already paying confiscatory property tax rates in South Cook communities like Ford Heights, Park Forest and Markham.
The takeaway is that one tax revolt does not make a revolution.
Chicagoans, and Illinoisans as a whole, need to challenge politicians’ addiction to tax hikes. They need to demand pension and labor reforms that will bring costs in line with what taxpayers can afford.
A long list of tax hikes
The Cook County pop tax – and CPS’ follow-up property tax hike – were just the latest in a long series of tax increases Chicagoans and Cook County residents have had added to their burdens over the past few years.
CPS’ tax hike comes on top of a $272 million hike in 2016 to pay for the district’s massive teacher pension crisis.
Cook County has also hiked a number of taxes over the past two years, including:
- A $474 million, 1 percent sales tax increase in 2016. Chicago’s combined sales tax rose to 10.25 percent with the hike, the highest combined sales tax rate of any major city in the nation.
- A new $15 million, 1 percent tax on hotels.
- $6.5 million a year from new fees on e-cigarette liquids and lawsuit filing.
- A new $750,000, 3 percent amusement tax on ticket-reselling websites in 2016.
The City of Chicago has also enacted numerous tax increases over the past several years. Most of those new revenues are going to pay for the city’s pension crisis:
- A record $700 million-plus set of tax hikes in 2015, including:
- A property tax hike that will rise to a total of $543 million a year by 2018.
- An additional $45 million in property taxes to pay for CPS capital projects.
- An additional $62.7 million from a new garbage collection fee.
- $60 million in new fees on taxis and ride-hailing services, such as Uber and Lyft
- $13 million from higher building-permit fees.
- $1 million from a tax on e-cigarettes.
- A $50 million increase on 911 fees, effective in 2015.
- A new $9 million tax on plastic bags in 2017.
- A new $12 million “Netflix” tax on movie streaming and other media in 2015
- A tax on water and sewer utilities that will raise nearly $240 million annually by 2020.
- The Chicago Park District also hiked parking, harbor and program fees by more than $1 million in 2016.
Shortly after the repeal of the pop tax, Cook County Board President Toni Preckwinkle lamented how hard it was for local governments to raise taxes with so much “anti-government sentiment” across the nation.
That’s because local governments are so deeply in debt – and so unwilling to reform – that they “need” to keep coming back to residents for more money.
The city of Chicago itself has saddled its residents with nearly $40 billion in general and retirement debt. Add in sister-government debts and Chicagoans are on the hook for over $70 billion in debt – and even more when you consider the debt hidden by shady budget games.
So consider this a warning to pop tax opponents and taxpayers alike: don’t expect the tax hikes to stop anytime soon.