10/22/19
Late last week, in her continuing quest to address
Chicago’s fetid financial footing, Chicago Mayor Lori Lightfoot proposed
increasing the Chicago food and beverage, or restaurant, tax by 0.25%. The Mayor argues that, in the great scheme
of things, this is a negligible increase, and she has a point. Right now, the total tax rate on restaurant
meal in Chicago is 10.50%, composed of
General sales tax 10.25%
Existing food and beverage (restaurant) tax .25%
Total 10.50%
unless one is eating in the McPier taxing area, in
which diners must pay another 1.00% in order to provide the politicians funds
to develop Navy Pier, McCormick Place, and the like, which is a more
palatable way of saying to give politicians the spondulicks to fund massive
projects designed to reward politically connected contractors, but those of you
who know Chicago-ese had no need of this translation. The McPier tax goes back nearly thirty years
and was supposed to expire once Navy Pier was “developed” into what it is today
(Yours truly will reserve aesthetic judgment to his readers.) and McCormick
Place was brought up to competitive standards.
However, the politicians have, mirabile dictu, found new, vital
projects to fund, such as Wintrust Arena and the infrastructure
supporting another new hotel, and even more remunerative sinecures to reward to
their various coat-holders and hangers-on, so the McPier tax continues. But I digress. When we add the McPier tax,
diners masticating in the McPier area face an additional 1.00% tax on their
meals, bringing the total tax on such meals to 11.50%. The McPier area, by the way, is not geographically
inconsequential, reaching from the Lake on the east to Ashland on the west,
Diversey on the North, and the Stevenson on the south, i.e., into areas that
rarely, and restaurants that never, serve conventioneers or Bear fans
looking to drown their sorrows after another stellar performance by the
erstwhile Monsters of the Midway.
Last Spring, the McPier area was to be expanded as far north as Irving
Park, as far west as Western Avenue, and as far south as Hyde Park. Much to the Mayor’s credit, she strongly
opposed that idea and it died in the state House. Yours truly, a huge fan of the Italian
restaurants on Oakley Avenue in the near southwest side neighborhood now
trendily referred to as “Heart of Chicago,” thanks the Mayor from the
bottom of his heart, but, again, I digress.
The Mayor’s logic in adding another 0.25% to the Chicago
diner’s already colossal sales tax bill is the old “drop in the ocean”
argument, and that logic has a certain appeal given that the total tax is “only”
being increased from 11.50% to 11.75%, or 2.2%, for McPier area diners and from
10.50% to 10.75%, or 2.4%, for non-McPier area diners. Compared to the tax increases that are
coming for, say, homeowners, Uber riders, or maybe even suburbanites working in
the city, this is indeed a drop in the proverbial ocean.
However…
Think of the underlying logic behind the “drop in the
ocean” argument. The additional tax
appears small because the existing tax is already so large. The implication is that it is in the best
interests of politicians to keep taxes really high so that any additional taxes
look Lilliputian by comparison…as if the pols, in Chicago or anywhere, need
any further incentive to keep taxes high.
And this is, of course, a self-regenerating argument…additional tax
increases make taxes higher making additional tax increases look smaller making
taxes higher making additional tax increases look smaller in a seemingly never
ending upward spiral. Such is the logic,
or at least the logical conclusion, of the Mayor’s argument, and it’s perfect
for politicians.
One concluding note of caution…
Am I arguing against the additional quarter of a
percentage point restaurant tax? No
more than I argue against just about any tax.
But at least this tax is understandable, given Chicago’s desperate need
for revenue because the city can’t, and surely has no desire to, cut its way
out of the cavern it has dug for itself.
Further, the additional restaurant tax is, at the risk of falling for
the aforementioned argument, small. Finally,
it is placed on an avoidable activity, i.e., eating out, which, by the way,
means that it will probably not generate the projected revenue, but that is grist
for future mills. So if yours truly is going
to get excited about opposing a tax increase, I wouldn’t do so in response to
this one. It is not the additional
restaurant tax per se that has inspired this post; it is the argument
the Mayor is using, that argument’s implications for future taxes, and the approach
to public finance that argument implies, that inspired this missive.
See my two books, The Chairman, A Novel of
Big City Politics and The Chairman’s Challenge,
A Continuing Novel of Big City Politics, for further illumination on
how things work in Chicago and Illinois politics.
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