WITH COOK COUNTY SALES TAX NOW A U.S.-HIGH 10.25%, Many Find Ways to Avoid It!
THE INTERNET, CHICAGO COLLAR COUNTIES, AND WISCONSIN POISED TO BE WINNERS!
10.25%! Consider, for a minute, the current General Sales Tax Level within Cook County, the county that contains the City of Chicago. Prior to July 1st of this year, the rate was still high - 9.25%. But now, the sales tax affecting Chicago and many of its suburbs is the highest of any big city in the U.S. Higher than New York. Higher than San Francisco. Higher than Los Angeles.
The Cook County Board approved the increase this past spring, to fill a budget shortfall, and avoid severe cuts to county services. While its many detractors call the tax a "money-for-patronage" grab - that there is already considerable bloat in the County Budget that can be eliminated - Cook County Board President Todd Stroger is concerned the tax might not be high enough - he originally proposed a 1.50% tax increase, which would have placed Cook County Sales Taxes at the 10.75% level, if that were approved.
The County tax increase came on the heals of a 0.25% City of Chicago Sales Tax Increase (and a 0.50% increase in suburban Cook County communities) that took effect last March, to fund shortfalls in area mass transit.
But as taxes here increase, clever area residents look for ways to legally avoid them.
Their answer, quite often, 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 sales-taxable.
Technically, the State of Illinois assesses a 6.25% use tax on goods purchased outside of the state, but used here. But it is hard to enforce, and rarely is. Autos, purchased in county or outside, always pay a reduced level of County and State Sales Tax.
Chicago area bricks-and-mortar shoppers, however, can often find big 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 drops to a more-comfortable 7.25%. That's a sizable $3 tax savings for every $100 spent - and it puts Hinsdale merchants on the Cook County side at a bit of 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 - which add up over the year!
According to 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 are trying to secede from Cook County. Last week, the Village Council passed a resolution endorsing a bill in the Illinois legislature that would make it easier for suburbs to do secede. Cook County President Todd 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 measure has a very weak chance of passage.
The new sales tax structure has left a patchwork of local taxes in the Suburbs of Cook County. Many communities, with lower municipal taxes, have combined sales tax rates ranging between nine and ten 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 2%. This fall, many Wisconsin merchants are using billboards and other advertising media to entice value-conscious shoppers to consider their neighboring state for their "Back to School" shopping.
For more info, check out Susan Chandler's story in last Sunday's Chicago Tribune.
DEAN MOSS & DEAN'S TEAM CHICAGO
