Revenue Policy

Cook County's Budget: Long-Term Imbalance Leads to New Pain for Vulnerable Residents

Release: November 14, 2017

On October 11, 2017, the Cook County Board of Commissioners voted to repeal a penny-per-ounce tax on sweetened beverages. The FY2018 budget presented by Cook County Board President Toni Preckwinkle had relied on the sweetened beverage tax to cover just over $200 million of the county's projected expenditures on services.

Illinois on Autopilot, the Reality of FY2016

Release: February 16, 2016

In both magnitude and meaning, state elected officials have no greater obligation than passing a General Fund budget into law. Consider magnitude first. Last fiscal year the General Fund budget provided for the expenditure of $35 billion. No question, that constitutes a sizeable expenditure of taxpayer money. It is also meaningful. While nearly $11 billion was targeted for Hard Costs like debt service and other legally mandated payments, over $24 billion was invested in current services across communities statewide. In fact, over 90 percent of FY2015 General Fund expenditures on services covered education (35 percent), healthcare (30 percent), human services (21 percent), and public safety (7 percent). To be clear, it is those services which provide for the basic health and well-being of the citizenry, and go to the very heart of why we elect a Governor and General Assembly in the first place.

By failing to pass a General Fund budget for FY2016, elected officials are basically punting the following difficult, but fundamental, responsibilities to: 

  • Make decisions about how to allocate scarce resources among the aforesaid four service priorities;
  • Identify which of, and by how much, those services will be cut, despite their high priority, if the state’s current woeful fiscal condition is not addressed; or
  • Raise the tax revenue needed to fund those core services to the amounts needed to satisfy demographically driven demand.

 

Capturing Resource Wealth to Invest in the Future: Possible Structures and Potential Benefits of an Illinois Coal Severance Tax

Release: October 23, 2015

This report compares the structures of severance taxes in other states and analyzes the potential benefits of instituting a coal severance tax in Illinois.

It Is All About Revenue: A Common Sense Solution for Illinois’ Fiscal Solvency

Release: September 9, 2015

This Report offers a solution to Illinois' longstanding fiscal shortcomings. There are a number of common sense, data-driven initiatives that will modernize the tax code—and still keep Illinois relatively low tax. The Report details how changes to Illinois' tax policy, primarily to its income and sales taxes, and re-amortizing its pension debt can completely eliminate its structural deficit.

Issue Brief: Expanding the Base of Illinois’ Sales Tax to Consumer Services

Release: May 20, 2015

This report identifies why expanding the base of the state sales tax to include consumer services—like pet grooming, haircuts, country club membership, health clubs, and lawn care—would simultaneously help to stabilize revenue generation for the state’s fiscal system, while reforming tax policy to comport with the modern economy. 

As detailed in the report, Illinois is one of 45 states that impose a general sales tax. And while the state-only sales tax rate of 5 percent is below the national average state-only sales tax rate of 5.5 percent, Illinois’ sales tax rate is applied, in large part to the sale of goods (like clothing and furniture) and not services (like pet grooming, health clubs, lawn care, and haircuts). Illinois’ sales tax applies to few services. In fact, of the 45 states with a general sales tax, the average number of service industries taxed is 51; Illinois is an outlier, taxing only five consumer service industries. And that is why the state’s sales tax policy fails to jibe with the modern economy. Indeed, over 72 percent of the Illinois’ economy is derived from the sale of services, while just 17 percent stems from the sales of goods.

Expanding the Base of Illinois’ Sales Tax to Consumer Services Will Both Modernize State Tax Policy and Help Stabilize Revenue, estimates that $2.105 billion in additional revenue could be generated if Illinois’ sales tax base was expanded to include primarily consumer service industries, while excluding business-to-business transactions and professional services. This could go a long way toward addressing the state’s fiscal difficulties. The report also notes that by broadening the state’s sales tax base, Illinois may also be able to reduce the state’s sales tax rate if policy makers so choose. 

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