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November 17, 2015

Illinois provides perhaps the best example of a sales tax system that has not changed with the economy and thus is failing in some key respects. According to a Federation of Tax Administrators survey conducted in 2007 and cited by virtually every analyst of service taxes, Illinois taxes fewer services than almost every other state.

Most recently, in May the Center for Tax and Budget Accountability and the Taxpayers Federation of Illinois issued an unprecedented joint ‘‘Issue Brief ’’ in which they called for taxing additional services. The brief argued that expanding the sales tax base would ‘‘improve the long-term stability of the state’s fiscal system’’ because it would allow the sales tax ‘‘to comport with both the modern economy and the principles of sound tax policy.’’

The case for modernizing the sales tax in Illinois is compelling.

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Source: State Tax Notes