As the debate over the City of Chicago’s budget shortfall heats up, there has been an interesting turn of events for a city that is bankrupt and a tax base that is already squeezed dry. While the people of Chicago are typically the bluest of blue voters, this new tax on Cook County Residents has sparked a lawsuit. The tax was passed in April 2013, but has yet to be implemented due to the suit.

Crain’s Chicago Business reports:

 

Law firm Reed Smith LLP sued the Cook County Revenue Department and director Zahra Ali over the personal property use tax, alleging that the statute effective last month is unconstitutional.

The 1.25 percent tax applies to personal property other than motor vehicles that was purchased outside the county by Cook County residents, not subject to Cook County sales tax and first subjected to use in the county.

In any year, a taxpayer could exempt as much as $3,500 (for a credit of as much as $43.75) on the first purchase that is subject to the tax.

 

In addition to raising money for Cook County government, the tax, by increasing the relative cost of items purchased outside the county, is designed to stimulate economic activity within the county.

This should be an interesting suit to follow as the city begins to debate the budget and taxes in order to compensate for a massive budget shortfall. For more read: Cook County sued by law firm over new tax – Law News – Crains Chicago Business.

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