Listen to the chants from Chicago: We're Number 1! We're Number 1! We're Number 1!
Chicago just leapfrogged past several other cities with the passage of a Cook County sales tax hike of one percentage point to 10.25%.
With that hike, Chicago Now has America's Highest Sales Tax.
Chicago has long had a steep sales tax, but a vote by Cook County commissioners Wednesday night made the city's rate the highest of any major city in the nation.
The commissioners approved a 1% hike, which bumped the sales tax rate in Cook County -- where Chicago is located -- from 9.25% to 10.25%. The increase passed with the minimum number of votes needed and is aimed at helping bail out the pension system for county workers.
Cook County Board President Toni Preckwinkle, who advocated for the hike, said the increase would generate an estimated $474 million more in sales tax per year and is necessary to ward off the "pension tsunami" that's closing in on the county. The retirement fund has a shortfall of $6.5 billion -- a figure that's growing by $360 million per year.
Congratulations are in order. Only one city can be number one. And Chicago is now on the top of the heap. Unions are cheering.
Unfortunately, everyone else suffers. Private taxpayers and businesses (those unable or unwilling to move) have to pay the price.
I am not sure how the county came up with an "estimated $474 million more in sales tax per year" but if they added 1% to current tax collection, I propose they will not come close.
- People will shop outside the county
- People will move
- Businesses will move
- Recession is coming
Get Me the Hell Out of Here
- In regards to businesses moving, please see Get Me the Hell Out of Here
- In regards to people leaving, IRS data shows Illinois Lost Residents to 42 States, and every state in the Midwest.
I am currently planning my own escape from this madness.
If the Cook County commissioners think they can stop a pension tsunami with tax hikes they are out of their minds.
- People and businesses will accelerate flight.
- The stock market and corporate bond markets are long overdue for a huge swoon.
- With 1% GDP growth, the US borders on recession (See Motor Vehicles, Housing Starts Boost GDPNow 3rd Quarter Forecast to Anemic 1.3 Percent).
- Illinois Pension plans are on average about 39% funded (See Illinois Pension Plans 39% Funded; Taxpayers On the Hook for $105 Billion in Liabilities; It Will Get Worse!)
Graft Chicago Style
The honest thing to do would be to admit promises made cannot possibly be kept.
But honesty and politicians (especially Chicago politicians) mix like oil and water. After all, those commissioners have their own massive pensions to protect.
Cook County Board president Toni Preckwinkle makes $170,000 a Year.
She is not worth a dime.
The pension tsunami that Preckwinkle is desperate to stop, is her own.
For icing on the graft cake (another "We're Number 1!" Chicago category), right after boosting the sales tax, Crain's Chicago Business reported Preckwinkle Seeks $130 Million in Pay Hikes.
In spite of the pension tsunami, Preckwinkle wants to give 27% of the tax hike to county workers.
In passing that tax hike, Cook County commissioners gave a big ****you to Illinois taxpayers.
Is it any wonder businesses and taxpayers say Get Me the Hell Out of Here?
In case you missed it, please see Mish with Max Keiser in Chicago, Discussing Chicago Economics and Pizza.