Illinois – U.S. Supreme Court Decision Opens Door For Repeal Of Obscure Illinois Tax

Illinois Policy Institute
by Adam Schuster and Travis Nix
June 23, 2018

Illinois is expected to raise an additional $200 million in sales tax revenue due to changes in the new state budget and the U.S. Supreme Court’s decision in South Dakota v. Wayfair Inc. Lawmakers should offset this expansion of the sales tax by ending a $200 million harmful tax on business investment.

A recent Supreme Court decision will yield hundreds of millions of dollars in new sales tax revenue for Illinois over the next several years. But instead of taking the windfall as an opportunity to repeal a particularly harmful and obscure tax on investment in Illinois, state lawmakers are already planning to spend the new money this fiscal year.

The U.S. Supreme Court rendered a decision in South Dakota v. Wayfair Inc. on June 21. And Illinois’ budget implementation bill, or BIMP – passed as part of the fiscal year 2019 spending plan – includes changes to Illinois tax law that closely resemble the South Dakota law the Supreme Court has upheld as constitutional.

Specifically, Illinois will now require out-of-state retailers to collect and remit a “use tax” of 6.25 percent if the business sells more than $100,000 of goods to Illinois residents or enters into 200 or more discrete transactions with state consumers. The use tax rate is the equivalent of the base sales tax paid by brick-and-mortar retailers in Illinois. The new law takes effect Oct. 1, 2018.

The Illinois Department of Revenue predicts this change will increase state sales tax receipts by $200 million this year. Without tax cuts to offset the new revenue, this amounts to another permanent tax hike in Illinois.

For More Information:
Illinois Policy Institute

Supreme Court Decision 6.21.18