Would You Shop Locally at 10+ Percent Tax?

by Carrie Kirby on 1 July 2008 29 comments

Today the sales tax in Chicago went up to 10.25 percent after a 1 percent hike in the Cook county rate.

The change has me thinking seriously about how much I can afford to pay to maintain the ideal of shopping locally.

I can't say I'm a paragon of local shopping, but if I have the opportunity to get into the stores in my suburb, Oak Park, or a few blocks away in Chicago, I do it. I certainly see the value in helping local stores stay afloat so they're around when I need them. In the past few years we purchased such big-ticket items as a replacement wedding band and a dining room set at local shops.

But when you're talking about TEN PERCENT of your purchase price going to the tax man, online shopping suddenly looks even more attractive. It's not like you're saving a few pennies by going online to a site that doesn't charge any tax. (And yeah, I know you're supposed to keep track of all those tax-free transactions and report them to the IRS, but I also know that most people don't.) Buy a $20 book tax-free and you save $2. Order a $500 bookshelf with free shipping, as we recently did, and you save a whopping $50.

I have to admit that this change will change my shopping habits. Most groceries are not taxed, of course, but alcohol is, and this will probably push me to stock up on wine and beer at Woodman's when we're up in Wisconsin visiting family. What other changes will we make? Eating out just got that much more prohibitive. And yes, when I'm Christmas shopping this year, I will probably make most of the purchases online.

It would be one thing if I felt that my sales tax money was going to support important local services and infrastructure. Like if I thought my extra dollars would make the El run safely and smoothly. Those of you from the Chicago area can take a moment to laugh. Cook county's waste and corruption are well known, and I heard citizens of the county's suburbs on the radio today say they feel that what "good works" county taxes do fund are concentrated on the city.

It's clear that most of my neighbors aren't going to feel any guilt about depriving the county -- and, incidentally, our individual towns -- of revenue by shopping elsewhere. I won't waste any guilt on the government hangers-on whose salaries won't be paid with my money either.

I do feel bad about those local merchants, though. It's a dilemma.

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Guest's picture
Lynnie

Especially since there is no sales tax in Oregon where I live :)

Guest's picture
Faye

I like shopping online because I get to shop tax free, but if I am in need of something immediately, I'd definitely shop locally.

Guest's picture

Carrie, you used to live in the Bay Area right? Sales tax has been 9% in San Francisco for a pretty long time and a lot of people still pay for it I guess. My mom lives in Contra Costa and the sales tax is 8.25%. She actually bought her coffee table and bed online and saved hundreds of dollars on taxes. I guess it can be worse. My cousins live in Vancouver, BC and the taxes on purchasing is something like 14%.

Guest's picture
Guest

Is this really that big a deal? A 1% increase? Your grocery tax is only 2% I believe so this would just be on clothing/electronics/furniture and the like. You'd have to be buying a lot to notice the difference I'd imagine.
The BC sales tax is currently 12%, down from 14 in 2 years, making no noticeable difference in my budget.
I'm sure you can absorb a 1% increase, if not you probably have bigger problems.

Guest's picture
Mike Rodriguez

This is the kind of thinking that really bothers me. How many more times will an increase happen before it's no longer acceptable? Why is there a sales tax in the first place when both the Federal and State governments take money out of your payroll? Out government has almost always tried to find new ways to pull the tax wool over our eyes. Add up everything you get taxed on, including your payroll, and you will see that we are taxed far more than you realize. Everyone accepts taxes as a "necessary evil" when they really aren't, since there were NO payroll taxes before the 1900's.

Guest's picture
Ugly American

Disregarding the cost, I've found physical shopping is nothing but a waste of time.

The bookstore didn't have the book I wanted.

The glasses place didn't have the shades I wanted.

The CD place didn't have the CD I wanted.

They all offered to order it for me.

I can do that myself.

And don't get me started on all the physical stores stocking forced labor shoes & clothes at premium prices because they've got some logo on them.

Guest's picture
Brigid

I don't shop much online, because often the best prices are negated by high shipping charges.

Also, here in Massachusetts, there is no sales tax on food or clothes, which helps make the sales tax less regressive. I remember visiting my sister in Chicago and being startled to be charged tax on clothes.

Xin Lu's picture
Xin Lu

Shipping costs can be lower than taxes.  Amazon offers free super saver shipping on anything more than $25.  When my mom bought the bed she comparison shopped first and found that even with shipping the cost was lower than buying it locally. This was a $2000 bed with $150 shipping.   When you buy something locally the shipping cost is already priced in. 

Guest's picture

My sales taxes (Texas) are over 8%. This is one of the main reasons I signed up for Amazon Prime. For things like razor blades and shampoo, the slightly cheaper prices plus no taxes make Amazon the obvious choice.

Here in Texas, random things are not taxed, like flour or some produce. But then some juice will be. Almost all the food I buy is taxed.

Guest's picture
Guest

Wow, I never realized how good I had it in Mass. Thanks for the eye opener.

Guest's picture
amanda

As a resident of Cook County, my husband and I were discussing this yesterday. Sales tax is 10.25% and then for restaurant meals, including fast food, 11.75% (which I found out when I forgot to bag my lunch yesterday).

Generally, we'll only be purchasing big ticket items in the adjacent counties from now on. We'll continue to frequent the same small, independent boutiques in our neighborhood (Logan Square) because it's important to support them but when it comes time to pick up a new computer or TV? We're DuPage County bound.

Carrie Kirby's picture

Sure, you can say "it's only 1%" but this comes on top of another relatively recent increase to make our sales taxes the highest in the nation. To be honest, the increase has merely opened my eyes to how high the sales tax already was. When I spent $1,000 a couple years ago replacing a lost wedding band, I did not really absorb the fact that I was paying around $90 in tax for my choice to buy in in my neighborhood.

 The higher sales tax is really going to be noticeable on my CVS trips, where I often pay only tax. 

Guest's picture
Elizabeth

In DC where I live sales tax is 10% on hotels and restaurants. So when you go to a restaurant you are essentially adding 30% to your meal with tax and tip. I completely agree that this creates a conundrum. Do you shop locally which supports not only local business but also your city's services?
It's a little bit of a catch 22 because if everyone turns to shopping elsewhere because of the high tax rate, then they will have to raise taxes even more to get the same about of $$ back in...

Guest's picture
AlainaOfArc

That would be nice! Up until two years ago, here in Ontario we were paying 15%. It's now slipped down to 13%.

Philip Brewer's picture

@Guest:

An increase in the tax from 9.25% to 10.25% isn't a "one percent increase."  It's a 10.18% increase.  A 1% increase would have raised the rate to 9.34%.

Guest's picture
Mark

Reminds me of the joke about the fellow who gets his MBA from a big time program, then goes to his wealthy immigrant grandfather for advice.
"Well, I used to buy a widget for one dollar, sell it for two dollars, and just take my one percent profit."

Guest's picture
Guest

It's more how sales taxes have grown over time.

25 years ago, total sales tax here was 4%.

Today it's 7% (7.5% if you live in the county with the new sports stadium), though food is only taxed at 2%.

I wonder what sales taxes will be in *another* 25 years?

Guest's picture
Cut Spending

When you go to vote this November think about this.

Government only seems to grow; they want more and more of YOUR money to spend. {What you don't give them today they borrow from your kids and force them to repay at the penalty of the loss of their liberty.}

It seems too me perfectly prudent and "thrifty" for us to demand that government live within its means and cut jobs and services and payrolls as necessary.

Guest's picture
NH Living

Sales tax is for chumps. Your state and local governments could get along just fine without this regressive tax.

Guest's picture
Guest

Would much rather see higher sales tax than income tax! At least then I have more control over how much tax I'm paying out!

Guest's picture
Guest

@ Philip- true- I obviously meant a 1% hike as the article refers to it.
I guess I just don't see why a penny on the dollar would put you in a tailspin.
A $20 top would cost $22.05 instead of $21.85- those 20cents send you running for the internet? Fine, but don't act like it's a big conundrum- if those 20c mean you won't shop locally don't pretend that you are concerned for your local merchants.

Guest's picture
Wilson

Soon all states will follow NY in collecting tax on internet purchases too. Then there will be no limit to taxes.

Guest's picture
Anna_esq

Taxes versus government services is a red herring. Everybody should read the book "Free Lunch." It's disturbing as hell and explains how hidden government "pork" giveaways to big business are the REAL cause of the sorry state of high taxes and government services. I guarantee it'll make your blood boil.

I don't mind paying taxes when I can see a return on my investment, but the taxpayer is definately getting jipped no matter what the location. I used to live in New Hampshire, which doesn't have a sales tax except 5.85% on "luxuries" like hotel rooms and restaurant meals. There's also NO income tax on earned income, only corporate and unearned income like capital gains. Property taxes are fairly high, but it stays in the town collecting the taxes. Crime is low in nearly all areas, most roads are meticulous, the schools don't have a lot of "frills" but most teach a solid basic education. The only towns which have had problems are towns that foolishly let problem businesses or housing tracts overstrain the town infrastructure with "pork" due to corrupt zoning boards and the other towns are loathe to bail them out. Because everybody knows a $2000 request to repaint Town Hall will be coming directly out of their property tax bills (and not some phantom "state" or "federal" money), town meetings are heavily attended and the person asking to spend money has to answer to the taxpayers. However, if the need is justified, the money gets voted approved. It's not perfect, but I think we've made a huge mistake getting away from simple cause-and-effect taxation. Sales taxes (on anything but food) are a generally fair way to tax because it taxes consumption, but NOT if the money is only getting siphoned away for some pork giveaway to a megacorporation.

Guest's picture
Kelja

Why no outrage? Government can tax, tax, tax and no one really gives a hoot. Especially, since the bulk of the burden always seems to fall on someone else.

This country was founded on a principal of Government By the People & For the People.

Does anyone believe this is true today?

The Government is a blood-sucking leech.

Guest's picture

Our sales tax is 8.3%, with noplace to go but up.

However, did you know that when you buy something online you may owe something called a "use tax"?

Yes. It is the law. When you buy something from, say, Amazon.com, you are supposed to remit the amount of your state tax to the appropriate department of revenue. Quite a few state governments would like to force online retailers to report all sales to the state where stuff is shipped, so that consumers can be made to cough up the sales tax, no matter where the seller is located.

Obviously state tax authorities are not chasing down every box of paperclips you buy online. But big-ticket items can attract attention. I bought a computer from a supplier in California and, several years later, was informed that I had to remit the use tax to my state government.

Guest's picture
Guest

Lot's of comments, but the reality is nothing will change.

As Naomi Klein said to Tom Hayden '' young people today discuss their dissent by blogging or ranting online '' and '' do you think the web is absorbing some of our outrage in a non-constructive way ? ''

Me thinks the internet has created a non-participatory America.

Yeah, complain all you want '' online '', just don't get involved in doing anything about it.

I will not support Cook County and it's retailers - consequences be damned. It's my message to the politico's who live so removed from mainstream America.

Guest's picture
Suz

I am a big fan of taxes (and yes I know that this will get me bombed with all sorts of hate from other commenters) but I am a fan of them because of the (and yes, I realize this is not actual, expecially in Cook County) ideal that I have that they are paying for the public good.

Sales taxes are supposed to pay for local services and assistance for creating a better local community. When I travel abroad, the taxes are much, much higher because they are actually doing this. I think that the US taxation system has become bunk. We fight every tax increase, so there are never enough funds to do any real good, so nothing really good ever gets done, so we feel our funds arn't being used well (and they arn't, especially in Cook county!) so we fight every tax increase. It's a horrible unending cycle.

I wish that there was a better way of implimenting the use of the taxes we currently recieve- to cut down on the corruption and buerocracy and use taxes for what they're meant to be used for- the public good.

Until then, I pay my taxes, but I also vote and write my represenatives and alderpersons and county commissioners with my issues.

-Suz

Guest's picture
Erica

Unfortunately, I have say no. I'd shop where I could get the best price. In an ideal world, I'd support the local merchants. But I have to support my family first and especially in this economy, that means buying what is cheapest.

Guest's picture
Mark

Thank you Chicago. Excise taxes in Tennessee are 9.035 percent. Tennesseeans for Fair Taxation last year helped get the grocery food tax knocked down one-half percent. So we are no longer the highest in the nation on excise tax.
With seven contiguous states, though, we lose a lot of tax revenue to those states.