By Ben VanMetre, Illinois Policy Institute -
Taxes are about to go up again on many items for Cook County residents under the county’s 2013 budget. The Cook County Board of Commissioners approved a $2.95 billion budget for fiscal year 2013 by a landslide 16-1 vote last week. The budget includes a series of new revenue initiatives– a $1 per pack tax hike on cigarettes, a $25 tax on every gun sold and a new tax on businesses - each intended to help fill the County’s $267.5 million budget shortfall.
The $1 per pack tax hike on cigarettes is estimated to raise $25.6 million. Cook County Board President Toni Preckwinkle argues that she’s not just trying to raise revenue; she’s trying to save lives. According to Preckwinkle, the $1 per pack tax hike will save 10,300 Cook County residents from premature, smoking related deaths and reduce smoking rates among the county’s youth.
But if her plan works and the tax hike does deter smoking, then the revenue will likely fall short of projections. Fewer smokers means less tax revenue from tobacco sales.
The same is true for Preckwinkle’s violence tax on gun sales in Cook County. Preckwinkle hopes to reduce the number of shooting victims in Cook County by making it more expensive to purchase a gun. Fewer people purchasing guns means less tax revenue from gun sales.
Taxing a behavior with the intention of both deterring that behavior and increasing revenues from that behavior is a failed model.
Perhaps the most ironic piece of Preckwinkle’s budget plan is her “pro-business” tax. Businesses that choose to make large purchases outside of Cook County will now be penalized for doing so. A 1.25 percent tax will be applied to non-titled purchases in excess of $3,500. Preckwinkle labeled the tax pro-business because it motivates business owners to buy locally.
Here’s the problem. The tax increase on cigarettes is supposed to deter smoking. The tax increase on gun sales is supposed to deter violence. The tax increase on businesses is supposed to increase business activity?
The irony is painfully clear.