Chicago Board Votes to Cut Highest U.S. Sales Tax, Board President May Veto

May 7, 2009

A week after the Illinois Policy Institute released a report on how Cook County’s 10.25% sales tax pushes shoppers—and revenues—into neighboring counties, the Cook County Board has voted to repeal its recent sales tax increase, which would bring it back down to 9.25%. Board President Todd Stroger has vowed to veto the reduction.

We chronicled how Stroger pushed through this unwise double-digit sales tax back in 2008.

Taxes matter. Surrounded by lower-tax jurisdictions not too far away, it was folly of Cook County to push through such a high sales tax. Our modern mobile society means that cities as well as states and countries must be attuned to nearby tax policy to stay competitive.

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A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.

A sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding.