It’s Only a 56% Tax Increase…

In the, “Tales, I win, heads, you lose” news of the week comes word of a 56% increase in Chicago’s telephone tax. The tax increase might prevent a $50 million property tax increase…but then again it might not.

The issues all stem from the problems with pensions in Chicago and Illinois. For those who aren’t familiar with the issues, Illinois is so far underwater on pensions that the state is in even worse shape that California. Chicago city pensions are in a similar situation–badly unfunded.

I’ll let the Chicago Sun Times tell a little of the story:

Instead of asking the Illinois General Assembly to simply renew a $2.50-a-month surcharge on telephone bills due to expire July 1, cash-strapped Chicago seized the opportunity to get more money — by persuading state lawmakers to raise the cap to “the highest monthly wireline surcharge imposed by any county or municipality” in Illinois.

That means Chicago can go up to $3.90, and increase a transaction fee on prepaid cellphones from 7% to 9%. The tax increase overall is expected to bring in $50.4 million. Earlier, Chicago’s city council passed a $250 million property tax increase ($50 million a year for five years); the phone tax increase will bring in enough money to possibly stop the first year of the property tax increase. Of course, there’s no guarantee that the Board of Aldermen (the official name of Chicago’s city council) and Mayor Rahm Emanuel will actually stop a tax increase.

Perhaps the city might look at cutting costs, too. Perhaps I’m also dreaming….

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