Wednesday, July 2, 2008

Cook County - Chicago --> Highest Taxes in the Nation: 10.25%

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Let me preface this by saying, any readers from Cook County - I feel for you. But to the greater populace of Americans reading the blog we've spoken at length on how the entitlement problem is going to make the (insert - energy, credit, mortgage, Katrina, crumbling infrastructure, Iraq) problems look like a piece of cake. If you really want to see what the politicians should be talking about (but they won't because the solutions would be wildly unpopular) see

[May 23: David Walker on CNCB this Morning] & [Mar 26: Annual Spring Entitlement Warning Falls on Deaf Ears]

But since we only deal with the crisis directly ahead of us in America (or actually, directly BEHIND us) all the fuss will now be about energy. Now, another point I've made that is getting almost no interest or attention now because it's "down the road" (i.e. any crisis more than 60 days out does not matter) is the city/state funding crisis. Our new fiscal year in most cities /states just started yesterday - and with the loss of tax revenue both from housing values faltering and a general slowdown in the economy (sales tax revenue), many cities and states are going to be in big trouble. Then layer in the energy costs and rampant medical cost inflation and a very bad problem is going to become a crisis situation. So as I've outlined in the past there are 2 main solutions - cut backs in services (read city/state jobs) or increase in revenue. How do you increase revenue? More taxes! Cook County is showing us the way with a whopping 10.25% tax on it's residents (keep in part much of this is a state tax from Illinois as well) But for many of you dear folks, this is your future. As the school year approaches I expect to hear crisis after crisis as shortfalls for things such as school buses and general funding appear. Just the first cockroaches coming out to see the light now... once again our whole economic system is based on (inflated) home prices and (inflated) consumerism. Now we are losing both. This will be the next big wave, both this fiscal year (summer 08 to summer 09) and especially next year (summer 09 to summer 10)

Somewhere in there will be an "economic recovery" per pundits on CNBC ;)
  • Chicago's no Second City, at least not when it comes to sales taxes. A boost in the Cook County sales tax that took effect on Tuesday means people shopping in Chicago now pay a cumulative 10.25 percent levy -- the highest of any major U.S. city.
  • A $300 purchase of say, a couch, in Chicago would now carry a sales tax of $30.75. By comparison, New Yorkers pay about 8.4 percent while residents of Los Angeles pay 8.25 percent.
  • County Board President Todd Stroger pushed through a 1 percent increase this year to help close a more than $200 million shortfall in the county's $3 billion budget, saying new money would go toward rescuing public health care services.
  • While Stroger has been a favorite target of disgruntled taxpayers, his office notes that Cook County still only accounts for 1.75 percent of the sales tax paid by Chicagoans, with the largest chunk -- 6.25 percent -- levied by the state of Illinois.
  • "The sales tax will kill us," said Lorri Burke, manager at the Second Chance thrift store in Steger, located just inside Cook County on 34th Street.
  • Annoyance about the tax runs deep. Nearly 76 percent of respondents in a recent Chicagoland Chamber of Commerce poll said the higher sales tax rate would lead them to change their buying habits, including by traveling outside the county.
  • The taxes may hurt Chicago's market competitiveness and create hardships for businesses already struggling amid an economic downturn
Our total inability to reign in medical costs will be the ruin of us. But since it's incremental and not as sexy as crude oil doubling in a year - it won't be noticed or dealt with - until it's catastrophic. As with all things here in our fine land.

Expect many more "Cook Counties" in the next 2 years.

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