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Jim Houlihan
Quick Hit
by Angela Caputo
Mon Mar 29, 2010

The Sales Tax Stampede

Earlier this month, Cook County Assessor Jim Houlihan jumped into the ongoing state budget debate to highlight an important point that lawmakers often gloss over. By not taxing services, Illinois' outdated tax system all but ignores the fastest growing segment of the state's economy. It's a reality that states across the nation are beginning to face up to, the New York Times reported over the weekend. For an explanation, we turn to an excerpt from the article:

But as the nation’s economy shifted to one focused more on services, the tax system mostly did not budge. And so, in 2009, states raised $230 billion in sales taxes; had they taxed all services, too, according to Joseph Henchman of the Tax Foundation, a nonpartisan research group, they might have raised twice that.

By Houlihan's count, lowering the state sales tax from 5 percent to 3.25 percent and expanding it to a wider range of services could generate an additional $1 billion in revenue annually. Combined with a series of tax reforms outlined under HB 174, which proposes expanding the tax to 39 services, the state could generate up to $7 billion more each year. As Moody's pointed out last month, failing to modernize the tax code will be awfully expensive going forward.

Quick Hit
by Josh Kalven
Mon Mar 8, 2010

Houlihan On The "Missing Part" Of The Budget Debate

After Moody's more-or-less endorsed the idea of expanding the Illinois sales tax to include more services, outgoing Cook Co. Assessor Jim Houlihan is reminding folks that he proposed doing so last year.  On Fox Chicago Sunday this past weekend, Houlihan pointed out: "We [levy a sales tax] on 17 services.  Many states range up to 100 services.  And we could greatly expand the base and reduce the rate and produce more money for the state and local governments."  Watch his full appearance here.

Houlihan's full proposal, released in April 2009, involves lowering the state sales tax from 5 percent to 3.25 percent, while expanding it to a wider range of services.  He estimated at the time that such an approach would generate an additional $1 billion in revenue.