Isn't Chicago Taxed Enough Already?


Posted by Will Upton on Tuesday, November 8th, 2011, 3:04 PM PERMALINK


Cook County Board President Toni Preckwinkle is pushing new increases in the excise taxes on distilled spirits and tobacco products.   The cost of a gallon of distilled spirits would rise by $.50 a gallon.  

On the whole, Chicagoans are already heavily taxed.  The excise tax on distilled spirits is already higher than New York City.  In January of this year, lawmakers in Springfield upped the state income tax by 66-percent. With more money coming out of their paychecks, what will Chicagoans think when they’re suddenly having to pay more for a bottle of whiskey or a pack of cigarettes?  The lower taxes of Indiana are just a few miles away. 

In response to the proposed tax increases, ATR has sent the letter below to Board President Toni Preckwinkle and the members of the Cook County Board: 

Office of Cook County Board President

118 N. Clark Street Room 537
Chicago, IL 60602

Dear President Preckwinkle,

I write to you in strong opposition to the proposal to increase the excise tax on distilled spirits by $.50 a gallon and to increase the excise tax on tobacco products.  The fact is, distilled spirits and tobacco products are already overtaxed and should not be considered an acceptable, sustainable, or stable source of new revenue.  An increase in the excise tax on distilled spirits and tobacco products would only exacerbate the problems of overtaxing and the continued lack of a sustainable revenue source. Time and time again taxes on liquor or tobacco have failed to meet their revenue projections. 

Lifestyle taxes like those on distilled spirits and tobacco products serve to divert related commerce to neighboring counties where the products can be purchased for a lower price.  They hurt small businesses, cost jobs, and rarely live up to their revenue estimates – in fact, in the case of Washington, D.C., an increase in the tax on cigarettes actually lead to a 20-percent decrease in revenues from cigarette sales. 

Enacting an increase in the excise tax would cost Cook County nearly 300 jobs, and lead to a projected decline of nearly $16 million in sales for distilled spirits.  When the unemployment rate in Cook County is over 10-percent and the hospitality industry in Chicago remains 13,000 jobs below pre-recession levels, you must ask yourself, is increasing the excise tax really what is best for the people of Cook County?  I think you will find that the answer is No.  Higher taxes on alcohol and tobacco will also exacerbate the economically deleterious effects of the 66-percent hike in the state’s income tax that lawmakers in Springfield levied on your constituents earlier this year.

Even at its current rate, the excise tax on alcohol in Chicago is higher than that of New York, increasing it further will only hurt the economy of a city that derives a great portion of revenue from tourism and conventions.  Higher taxes drive away consumers, it is simple.  Without consumers and tourists, the sidewalks along Michigan Avenue may become quiet and empty; the convention center at McCormick Place may lay dormant.

Lastly, increasing the excise tax would only further the regressive harm the tax does at its currently onerous rate.   Companies don’t pay taxes, people do. Businesses pass new costs on to consumers.  It will be the middle-income and lower-income Cook County workers and families who will bear the brunt of this tax.  Lifestyle taxes disproportionately hurt those that can afford the new tax least. 

I encourage you to take this letter into consideration, and stand up for heavily burdened Cook County taxpayers by rejecting any increase to the excise tax on distilled spirits and the excise tax on tobacco products.  

Onward,

Grover G. Norquist

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