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More Regressive Fee Hikes Coming to Chicago?

by Clark Packard / /

Recent news reports indicate that Chicago is considering raising its 911 emergency fee, among other telephone taxes, to shore up its troubled pension plans after the Illinois Supreme Court recently invalidated the city’s 2014 pension reform efforts. That 2014 law increased the city’s 911 fee from $2.50 per line per month to $3.90 per line per month, the highest such rate in the nation.  Though 2014 pension reform effort was struck down, the tax hike stayed on the books.

Approximately 14 percent of the Windy City lives in poverty, yet the city has one of the most regressive local tax burdens in the country. A December 2015 study released by Washington, D.C.’s chief financial officer compared the combined tax levies of each state’s largest city, considering automobile, income, sales and property taxes (but not including regressive telephone taxes and fees). How did the Windy City fare? A family earning $25,000 per year pays on average nearly $3,600 in those taxes – which works out to a rate of more than 14 percent of their income. This means Chicago’s tax levies are seventh highest among the nation’s largest cities for those struggling to make ends meet.

But what about those slightly better off? A family with an income of $50,000 per year would spend over 10 percent of its income – or more than $5,100 a year – on local tax levies alone, again excluding the city’s exorbitant telephone taxes.

At the same time, a family of four living in Chicago might pay about $100 per month for wireless service and connectivity. That family would pay an effective tax rate of 36 percent for their wireless services, including federal, state and local levies – or over $430 in taxes annually. When coupled with the other taxes levied in the Windy City, it is clear that Chicagoans cannot afford to fork over more of their hard earned dollars to spendthrift politicians.