Coming to Chicago, or Suburban Cook County, near Chicago? Bring lots of money!
Effective July 1st, our the combination of local, county, and state Sales Tax increased to 10.25%! That's the highest of any big city in the country.
Sales Taxes increases were passed last Spring, to fill considerable budget holes for County Services, and Local Mass Transit. Detractors of the Cook County portion of the tax increases point to what they consider a lot of "fat" in county government, which should have been trimmed to avoid the increase.
Cook County Board President, Todd Stroger, disagrees. In fact, his original proposal, thankfully defeated, called for a 10.75% sales tax in many parts of Cook County, the county that includes the City of Chicago.
As sales taxes increase in Cook County, however, so have the number of consumers finding legal ways around paying the increase.
The easy answer, for many, is The Internet. Many online merchants only charge sales tax if they have a PHYSICAL PRESENCE here - a store, or a warehouse. Thus, Chicagoans can purchase merchandise from Maine Clothing Merchant L.L. Bean and pay no sales tax. Buying Land's End clothing and other merchandise - owned by Sears Holdings, headquartered in the Chicago Suburb of Rolling Meadows IL, is fully subject to the higher sales tax.
Technically, the State of Illinois assesses a 6.25% use tax on goods purchased outside of the state, but used here. But the Illinois Use Tax is rarely enforced. Autos, purchased in county or outside, always pay a reduced level of County and State Sales Tax.
Chicago area shoppers buying in physical retail stores, however, can often take advantage tax savings simply by driving a few miles away.
Residents of the Chicago suburb of Hinsdale IL would pay the 10.25% higher Cook County Sales Tax on purchases from merchants on the Cook County Side of the community. If they drive across County Line Road, and into adjacent Du Page County, however, the sales tax falls to a more-comfortable 7.25%. That's a sizable $3.00 tax savings for every $100 spent- and it puts Hinsdale merchants on the Cook County side of town at a competitive disadvantage.
In Chicago Suburban Palatine IL, which abuts neighboring Lake County, Mayor Rita Mullins does much of her own shopping in the town of Lake Zurich, just over the Lake County Line. Again, she saves a considerable 3% sales tax on her purchases. These few dollars per shopping trip can really add up over a year's time, she contends.
Says Mayor Mullins, "It's another encumbrance to the working families' everyday life. There's the cost of gasoline. There's the sales tax. There's the rising cost of food. There are rising utility costs. ... When you combine all of it, how do working families and retired people cope everyday? In order to survive they have to make more and more cuts to their daily lives."
Mullins and other Palatine residents are so angry over Cook County's latest sales tax increase that they have threatened to secede from Cook County. Last week, the Palatine Village Council passed a resolution endorsing a bill in the Illinois Legislaturethat would make it easier for suburbs to do secede. Cook County President Stroger has said he wouldn't stand in the way of such a move, although it would cost the county millions of dollars in lost sales tax revenue. Most think the Palatine initiative has little chance of passage.
The new sales tax structure has left a patchwork of local sales tax rates in the Suburbs of Cook County. Many communities, with lower municipal taxes, have combined sales tax rates ranging between 9 and 10 percent.
Another beneficiary of the local increases in sales tax - the neighboring State of Wisconsin! Sales taxes in most of Wisconsin are 5%- potentially saving Chicago Residents 5.25% on sales tax expenditures, and even those in Lake County a more modest, but significant, 2%. This fall, some Wisconsin merchants are using billboards, radio, the Internet, and other advertising media to entice value-conscious shoppers to consider their neighbor state to the north for their "Back to School" shopping.
Throughout IL, taxes on food and medicine are considerably lower - 2% - and were not affected by the most recent sales tax jump. Cars and trucks were also unaffected this time around, but local vehicle sales taxes always apply where the vehicle is being REGISTERED, not where it was actually PURCHASED.
See our post this morning @ BlogChicagoHomes.com for more info, as well as a link to Susan Chandler's story in the July 20th edition of The Chicago Sunday Tribune.
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