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Cook Co. board cuts tax on out-of-county purchases

Cook County Board President Toni Preckwinkle  |  Sun-Times files

Cook County Board President Toni Preckwinkle | Sun-Times files

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Updated: July 22, 2013 6:18PM

The Cook County Board reduced one of its taxes Wednesday despite the likelihood that it will face a steep budget shortfall.

On a voice vote with one dissent, the board voted to reduce the tax on purchases of non-titled personal property from 1.25 percent to 0.75 percent. It applies to purchases of goods outside the county mostly by businesses within it.

The reduced rate matches the county’s sales tax rate. County officials said the partial rollback answers a legal challenge that differential tax rates violate the U.S. Constitution.

But plaintiffs in two lawsuits also have charged that the county overstepped its authority in enacting a value-based tax not authorized by the state Legislature.

“We proposed the tax reduction to address business community concerns and to strengthen our legal argument,” said County Board President Toni Preckwinkle. She said she is convinced the county has the home-rule powers to institute the tax without the state’s consent.

The revenue loss comes into play as budget officials calculate the county’s midyear shortfall. In three prior years, the midyear shortfalls have ranged from $267 million to $487 million, amounts made up in part by hiring freezes.

Preckwinkle and Budget Director Andrea Gibson would not speculate on this year’s deficit. “We will have a complete assessment next week,” Gibson said. Preckwinkle noted that the midyear shortfall has gotten smaller each year since she took office.

Slashing the tax on non-titled personal property will cost the county $5 million this year and $14 million next year, Gibson said. The tax took effect April 1.

It applies to sales outside of Cook County for tangible goods such as office supplies and furniture, but not real estate or vehicles. Buyers in Cook County are liable for the tax once their purchases exceed $3,500 per year.

It was instituted in 2012 to capture revenue from deals by Chicago-area companies seeking to avoid the county’s sales tax. It was promoted as part of a “buy local” push to keep business within the county.

But the tax and its reporting requirements drew complaints and two lawsuits.

Officials said 35 persons or businesses have paid the higher 1.25 percent rate under protest and may be able to get refunds. Otherwise, refunds won’t be allowed, they said.

The only vote against the rate reduction came from Elk Grove Village-based Commissioner Timothy Schneider (R-15th).

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