By John F. Di Leo -
In November, 2016, the Cook County Board of Confiscators created a new tax on most non-alcoholic beverages – punitive, astronomical, and unconstitutional.
Virtually everything that could be wrong with a government policy was wrong with this one, and the community reacted with unexpected force. County commissioners reported receiving more complaints about this issue than on any other issue in their careers. Despite a united front held by County Board President Toni Preckwinkle through the summer 2017 implementation, the resolve of her members soon withered as the real effects of the hated tax began to be felt. In the end, it was repealed after less than three months of actual collection, and will be gone completely when the clock strikes midnight on December 1.
The question for us is therefore, do we pat ourselves on the backs and enjoy the victory, or do we double down, and put the lessons of the beverage tax to work in other areas of public policy?
Problems Galore
The beverage tax suffered from a number of key flaws, and all were so tangible that they became visible to every onlooker. For example:
- With a range of anywhere from 30% to 80%, and with a peculiar target list of products, no cash register system could be designed to accurately collect it, so the tax is an administrative nightmare for businesses.
- The cost being so high ($2.88 on a six-dollar 24-pack of pop, for example), it drove people out of the county. Hundreds of thousands of shoppers, particularly those on the geographic periphery, switched not just their beverage purchases, but often all their grocery purchases, to stores in neighboring counties.
- This massive loss in business caused grocery stores, fast food restaurants, convenience stores, and every other business that depends on beverage sales to cut employees’ hours, cut employees, and even begin consideration of shutting down entirely (Philadelphia’s nearly identical experiment has resulted in hundreds of such stores going out of business).
- The tax was likely to eventually fail in the courts anyway, because it’s unconstitutional; the Illinois Constitution requires that taxation of like products be identical, and the demarcations between taxed and untaxed in this experiment were utterly capricious.
- Since federal rules don’t allow such a tax to be applied on food stamp purchases, the tax drove a huge class wedge between those paying with SNAP cards and those not. The relationship between people on relief and people struggling to make it without aid has never been so tested.
- Most taxes don’t bring in the revenue projected, but the differences are rarely this stark. The county had projected $18 million from this tax in August, and when the numbers were in, it brought in less than $300,000. Even for the normally economically illiterate, this proved how much the county was losing in sales taxes due to shopping fleeing the county. This wasn’t due to an error in calculation; it was due to an error in behavior; the county simply never believed that shoppers would vote with their feet. We did.
This is a victory. For one short period of time, really, barely over a quarter, the vast majority of Cook County residents started paying attention to economics. Voters who have usually shrugged their shoulders and taken taxes as part of the unavoidable realities of life actually picked up a phone and complained to their representatives. Grocery stores and fast food places posted signs sharing the phone numbers of the county commissioners. An alliance of businesses took the county to court on the constitutionality grounds. And people made huge changes in their behavior, as they started shopping in different tax jurisdictions.
This must not stand as a brief blip in American history. This should be a clarion call: to all who want America to again be the nation our Founding Fathers intended for us, we now have a blueprint for what works!
Constant action, constant flooding of the airwaves and news, punishing districts that take the wrong position, rewarding districts that choose right. Activism.
Nobody dumped soda pop in Lake Michigan as part of a “Boston Tea Party” action; nobody held violent rallies or attacked elected officials. There was no need.
The opponents just kept the pressure on, and focused on the facts… in a way that everyone – every voter, every shopper, every parent, every consumer, every politician – could understand.
This isn’t the way to address every issue, but perhaps this is a template for some issues. Consider:
The Minimum Wage
The right has always quoted economists, cited statistics, written columns, and testified before committees, proving that the minimum wage destroys jobs, destroys opportunities, freezes out whole groups of people from any chance at the American dream… but we get nowhere. We even see politicians like California’s Governor Moonbeam make idiotic statements like “It may not make economic sense, but it makes moral sense. It’s the right thing to do.”
The destruction caused by the minimum wage – particularly by one jurisdiction setting a higher one than neighboring jurisdictions – is at least as clear and powerful as the beverage tax. Employers flee when the minimum wage is hiked, not only eliminating the starting jobs that locals need when just starting out, but also the permanent full time jobs that the same companies employ.
When we talk about entry level jobs, we often forget that the same companies also employ managers, buyers, salesmen, engineers, executives, and all sorts of other good full time positions. When you drive that company away, you drive away both kinds of jobs – both that critical first step on the bottom rung of the ladder, and every other rung on that ladder as well.
Catch and Release Criminal Justice
Just as the beverage tax made Cook County a hostile environment for a certain class of employment – grocery stores, fast food places, Walmarts and Costcos, convenience stores – our catch-and-release criminal justice system creates a hostile environment for more narrowly-defined neighborhoods.
Throughout the region, there are suburbs or neighborhoods of the city where people simply dare not go. Employers, shoppers, tourists, everyone avoids the areas that are known for high crime.
And we know exactly WHY they have the high crime: It’s not that we don’t catch criminals; we catch them all. It’s not that we can’t prosecute and convict them; we certainly do. The problem is that we let them go. Our sentencing is too soft; when they get out, the return right back to the same community they terrorized before.
When we talk about fixing the big cities, particularly the Chicago metro area, we must remind people of the effect of high crime on their neighborhood, on their employment options, on their cost of living. Auto insurance costs more, safe housing costs more, jobs are harder to find, people who need second jobs can’t take them because the dangers of being out at night… The catch-and-release system does at least as much damage to every citizen’s life as the beverage tax did.
Corruption
One of the hardest issues to tackle in big cities like Chicago has always been political and bureaucratic corruption. Many people tolerate it, because they just think it’s the way it is… but what if the corruption was ended? Think of the investors, the startups, the developers who would love to shower their investment on a place like Chicagoland if only it managed to solve these issues?
The news of the week – this week – is on the pressure brought to bear on a Wicker Park building owner by aldermen and bureaucrats, in an effort to force the landlord to approve a politically connected tenant, using the threat of municipal zoning powers to bend him to their will.
Every year, every month – sometimes every week – there is another such story, going back decades. One year it was Operation Greylord, another it was Silver Shovel… sometimes the focus was on an individual, sometimes on whole rings. Sometimes the pressure was brought by the press, sometimes by the feds. For all their differences, the one constant in Chicagoland has been that there’s always a corruption case, and it never seems to end.
But what if it did? What if we could end the corruption, by identifying the practitioners and defeating their protectors at the ballot box?
Think of Foxconn, building a massive new complex just north of the Wisconsin line. They never considered Illinois. But they could have… if only we’d remove the deal-breakers that drive wise investors away.
So much that’s wrong with Chicagoland is fixable. Just remove the barriers – the big, systemic barriers that act as “Keep Out!” signs to any possibility of economic expansion – and we could be on our path to prosperity again, as we once were.
Thanks to the ill-fated beverage tax, we now see what works:
- Make the economic case CLEAR.
- Show how the problem affects YOU, personally, and your children, your spouse, your friends.
- Publicize which specific politicians need to be called, lobbied, educated… or replaced.
- Put the signs EVERYWHERE – on social media, on billboards, on store shelves, on the drive-through windows.
- And don’t let up until you succeed.
This is our state. We have seen how it’s done.
Now let’s do it.
Copyright 2017 John F. Di Leo
John F. Di Leo is a Chicagoland-based trade compliance trainer, writer, and actor. Though born in Chicago, he moved to the suburbs at the age of one and never looked back.
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