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Cook County, Illinois, Experiences Disastrous Rollout of Its Soda Tax

Budget chaos at the state level isn't helping.

The rollout of a soda tax in Cook County, Illinois, has been a complete fiasco.

Much to the frustration of businesses and taxpayers in a county that includes Chicago, officials have repeatedly vacillated on applying the soda tax to purchases made with food stamps.

They haven't been able to decide how the tax will be administered or determine how much revenue the tax will generate.

In November 2016, when a narrow vote of the Cook County Commission passed the one-cent-per-ounce soda tax, Commission President Toni Preckwinkle promised that revenue would help balance the budget and put the county on "stable financial footing for the next three fiscal years."

Preckwinkle had projected the soda tax would generate $74 million in its first year. Combined with a projected $80 million in cost reductions, Preckwinkle was confident the county could eliminate its $174 million budget deficit.

County officials, however, had initially planned to tax distributors, who would pass along the cost in the final sale price of a sweetened beverage. Last Thursday they cancelled that plan when the Cook County Revenue Department pointed out the sales price would still be subject to a sales tax.

A tax on a tax is illegal in Illinois.

When the county made the soda tax a line item at the point of sale it ran afoul of the Department of Agriculture, which advised it was against federal law to tax transactions paid for with benefits from its Supplemental Nutritional Assistance Program (SNAP).

The SNAP waiver exempts roughly 873,000 Cook County residents from the soda tax.

The county comptroller said last Friday that he was unsure how much the exemption will reduce the tax revenue projections. Cook County is already having enough of a headache trying to plan around the budgetary chaos going with the state.

Illinois has unfunded pension liabilities estimated at anywhere between $180 billion and $360 billion and a $6 billion annual budget deficit. The root of the problem, Michael Lucci, of the Illinois Policy Institute, says, is "the costs of payments on debt and pension liabilities is crowding spending on everything else."

For the past two and half years, Republican Gov. Bruce Rauner and the Democrat-controlled legislature have been unable to come to an agreement on how to address the budget deficit, much less the pension liability problem, Lucci says.

"Democrats have said they want a tax increase to pay for increased spending…the governor has said that there needs to be economic reforms to offset that tax increase," Lucci says, "but because there is no agreement, nothing is happening."

The result is no budget and a government essentially on autopilot, unable to deliver promised funding to state vendors and local governments, he says.

The state government currently has $14.8 billion in unpaid bills. Cook County alone is owed $48.2 million, a number that was as high as $180 million just last year.

Unable to count on the state government to pony up promised funds, Lucci says most local governments are turning to tax increases. "Chicago is raising taxes like crazy," he says, "Cook County raised the sales tax."

In 2015 Cook County raised its sales tax a whole percentage point to help cover its pension liabilities. Some 20 other Illinois communities did the same at the beginning of this year.

However, that proved to not be enough, and now Cook County is looking to its soda tax to keep its budget afloat, saying that without the revenue it would bring in, the county would be looking at significant layoffs for public safety officials, understaffed court rooms, fewer public defenders and state's attorneys.

A soda tax gutted by the federal government isn't the solution Cook County hoped it would be.

Photo Credit: City Club of Chicago/Vimeo

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  • Tom Bombadil||

    Is Yoda writing the headlines?

  • ||

    It's not just the headlines. The article could stand a once-over from a competent/sober editor.

  • Careless||

    Her name could have used an editor, at that

  • Tom Bombadil||

    The only thing missing from this story is the racist targeting angle.

  • retiredfire||

    Isn't this the tax that they decided would also be attached to diet - sugar free - drinks, also?
    Because white people are most likely to drink diet, while minorities like the full-sugar, thus the tax would disproportionately hit the minority population.

  • Tom Bombadil||

    Give me a pad, pencil, cup of coffee and 30 minutes of quiet, and I could figure out how to make this program work... not that I would want to.

  • Agammamon||

    Eh, its simple enough.

    Have the distributors tax as planned.

    File a quick amendment to the bill stating that SNAP purchases would be taxed the extra cent (as originally intended) but simultaneously refunded *two* cents at the POS - negating both the 'regressive' tax and the illegal SNAP POS tax. While anyone who is not on SNAP can pick up a paper form to add to their tax return to get a refund of the illegal POS tax. Ensure that it requires legible receipts! Don't want anyone cheating after all.

    Make the whole thing difficult enough with strict enough eligibility rules and you could probably take in 50% more than projected - which will be enough to fund the new government department that will be created to oversee this. Win-win.

  • ||

    Eh, its simple enough.

    So, the refund that gets filed with and/or pulled from the tax return, that would be the State Taxes and would, presumably, need to grace the Governor's desk, right?

  • SimonD||

    I have an even simpler solution.

    Remove soda from the acceptable SNAP purchases.

    There is no reason why government welfare benefits can't be subject to restrictions.

    If SNAP recipients want to buy soda, they can use their own money (and pay the soda tax).

    Of course, an even simpler solution is to CUT SPENDING!! (I know, this is Chicago)

  • SilentSkies||

    Ding ding ding. We have a winner.

  • Sevo||

    "Preckwinkle"
    That's from "My Little Chickadee", isn't it?

  • Rich||

    Godfrey Daniel!

  • Libertarian||

    "Combined with a projected $80 million in cost reductions, Preckwinkle was confident the county could eliminate its $174 million budget deficit."

    I really doubt it. Prickwinkle might have acted confident, but if she's like most of our pols, it was only to get something approved.

  • pan fried wylie||

    *Prickwrinkle

  • ||

    Kafka, you have a call from Vonnegut on line 22.

  • Get To Da Chippah||

    However, that proved to not be enough and now Cook County is looking to its soda tax to keep its budget afloat, saying that without the revenue it would bring in, the county would be looking at significant layoffs for public safety officials, under-staffed court rooms, fewer public defenders and state's attorneys.

    Oh Em Gee the horror!

  • Rhywun||

    I find it supremely amusing that the poorest of the poors, who are after all the original target of this paternalistic BS, are now exempt from it. Oh, and the fact that they think they can float the gargantuan government leviathan on soda taxes. Oh what the hell, the whole trainwreck is hilarious.

  • BYODB||


    However, that proved to not be enough and now Cook County is looking to its soda tax to keep its budget afloat, saying that without the revenue it would bring in, the county would be looking at significant layoffs for public safety officials, under-staffed court rooms, fewer public defenders and state's attorneys.


    Wow, for once they didn't even pretend that this has anything to do with public health. Color me impressed.

  • Careless||

    Hard to do when they're taxing every beverage in the store other than milk, iirc

  • Unlabelable MJGreen||

    lol

  • chipper me timbers||

    For once, this made my day. So delicious. (no pun intended)

  • Rich||

    Preckwinkle promised that revenue would ... put the county on "stable financial footing for the next three fiscal years."

    HAHAHAHAHAHAAA!!

  • Citizen X - #6||

    Look, math is hard.

  • ||

    In her defense she made no claims regarding the County's ability or intent to immediately destabilize that footing. At this point, I just pretty much assume that statements like that come with an "If the Governor would just..." attached.

  • Conchfritters||

  • Libertarian||

    "When the county made the soda tax a line item at the point of sale it ran afoul of the Department of Agriculture, which advised it was against federal law to tax transactions paid for with benefits from its Supplemental Nutritional Assistance Program (SNAP) program."

    Is the Seattle mayor aware of this??

  • Fuck You - Cut Spending||

    One wonders why soda is eligible under a nutritional assistance program. You'd think Michelle Obama would have made a stink about it 8 years ago.

  • Rhywun||

    Food stamps are good for any food and drink - the only exception is "prepared meals" like rotisserie chicken and such.

    The actual "nutritional assistance program" is still WIC which is indeed only available on a very limited set of food like juices, cheese, formula.

  • Agammamon||

    Its actually disgusting how the rules are complicated.

    A *cold* sandwich* can be sold on SNAP. The same sandwich heated by the store can't. But you can put a microwave out for the customer to heat their cold one.

    As long as you don't allow them to eat there. Then its back to being a 'prepared food'.

  • Diane Reynolds (Paul.)||

    These rules exist for a reason.

  • C. S. P. Schofield||

    Yes. They exist because some moron wrote them. So far as I can see that s the only reason for MOST regulations.

  • Scarecrow Repair & Chippering||

    A zillion years ago, when I was a kid and reading the SF Comical, the legislature got hung up trying to work out the difference between snack and food, for tax purposes. You know those little peanut butter cracker packs in vending machines? If the peanut butter is separate from the crackers and the pack includes a little plastic spreader, that's food. if the peanut butter is already between crackers, that's a snack.

    Or it was way back then. Heaven knows w=how that has been squeezed in all the intervening years.

  • pan fried wylie||

    Which one is a vegetable though?

  • Lord_at_War||

    Which one is a vegetable though?

    The one who wrote the laws?

  • Radioactive||

    is is my wienie...

  • Gaear Grimsrud||

    Apparently the Cook County board does not have competent attorneys able to determine whether or not their tax schemes are legal under state and federal law. I'm guessing budget cuts are to blame.

  • Jerryskids||

    This is so stupid. There's a problem with levying the tax - tax it at the wholesale level and it's illegal to tax it at the retail level, taxing it at the retail level is illegal for SNAP purposes. So just go ahead and tax it at the wholesale level and exempt it from sales tax. The resulting price increase won't count as a sales tax for SNAP purposes and there's no double taxation if cash purchasers aren't charged sales tax.

    That's what you want anyway from a public health standpoint, isn't it? Raise the price sufficiently to decrease sales, you'll know you're hitting your target as the tax becomes revenue-neutral on its way to revenue-negative. You'll have achieved success when you don't collect a penny from the soda tax because nobody buys sodas. Right? That is what you want, isn't it? Nobody drinking sodas, not nickel-and-diming the poor shmucks who've got your foot on their necks as you fuck them over for all they're worth?

  • retiredfire||

    Dude!
    Say the can of soda costs a buck, then they add the 12 cents for the tax. Your plan would mean zero sales tax on a sale that would have produced sales tax on $1.12. Too much of a loss for voracious government.

  • Conchfritters||

    Wow - - looks like Chicago and the State of Illinois owe money all over town.

  • Rhywun||

    That's a nice freeway ya got there - be a shame if anything happened to it.

  • Longtobefree||

    How much will the tax on the income of SNAP recipients who bootleg soda bring in?

  • Agammamon||

    About 124 grains.

  • Unicorn Abattoir||

    Now that's a damn shame when government regulations stop the government from passing a tax.

  • Fist of Etiquette||

    A soda tax gutted by the federal government isn't the solution Cook County hoped it would be.

    There's something out there that hasn't been taxed. Cook County just has to find it.

  • Rhywun||

    I think there's a song about some dude taxing various things. They can look there for pointers.

  • pan fried wylie||

    They haven't taxed competent taxation, due to obvious supply issues.

  • Bassboat||

    Here we go again, tax, tax, tax and it won't help one iota. Politicians will not cut spending so therefor cook county will continue in its own sty for decades. What is need for Cook to have term limits and to belly up to the bar and level with the ex-employees that their benefits will be cut, period. These ex-employees were given lavish benefits that far exceeds the private sector and are obviously unsustainable. What will happen will be the game of kicking the can down the road until Chicago becomes another Detroit. It would be better to be honest with the people drawing a retirement now than to go bankrupt and they get zero. I am well aware that my solution is not politically possible but politics caused this disaster and the politicians won't clean it up. Detroit was the tip of the iceberg and Chicago and many other democrat controlled cities will follow. See Sandy Springs, GA for an example of how to run a city, private ownership of services.

  • CE||

    ...officials have repeatedly vacillated on applying the soda tax to purchases made with food stamps recipients.

    How many food stamps recipients do you need to trade in for a case of Dr. Pepper?

  • MDP||

    "the county would be looking at significant layoffs for public safety officials, under-staffed court rooms, fewer public defenders and state's attorneys."

    Better to remove cops from the streets than to touch those sacred pensions.

  • Mudhen||

    IL is losing people at the rate of 1 every 4.6 minutes. Its only a matter of time before they try to pass an exit tax.

  • MichaelL||

    Too late for me! But, it is much cheaper here in Ark-kansas! It really is better when I pay for car tags or personal property taxes! And, they have medical cannabis, too! Illinois just needs to pass recreational cannabis legalization!

  • Don't look at me.||

    Talk about a taxing opportunity!

  • Dan S.||

    A tax on a tax is illegal in Illinois.

    Really? Does anyone seriously suppose that no part of the price of anything subject to Illinois sales tax represents a recovery of taxes paid by the manufacturer?

  • Eman||

    If raising the price of something gets you less of it, a tax on taxes sounds great!

  • Eman||

    "Toni prenkwinkle", coincidentally, was my penis' nickname in college. Long story.

  • jerryg1018||

    Ah, the best laid plans of mice and politicians. Who didn't see this train wreck coming?

  • IMissLiberty||

    What next? A campaign to encourage people to drink more soda? Or, if the alcohol tax is working, why not just encourage people to drink?

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