City Sales Tax Issue

The State Journal-Register reported "At least half of Springfield aldermen oppose raising sales tax" apparently to 8.75%. Springfield has a population around 115,715. Seattle, Washington has an official population of 608,660 as of the 2010 census, but the wider metro area has a population of at least 3.5 million people. The state of Washington has no income tax. Seattle has a sales tax of 9.6%. 6.5% of which goes to the state, 2.7% goes to the city of Seattle.

Currently, Springfield's sales tax rate is 6.25% but the total combined city, county and state sales tax is already at 8.5%, plus there's an income tax rate ranging from 3.75% to 4.95%.

The problem: Population shrinkage. According to the Federal Reserve Economic Database (FRED), The civilian labor force in Springfield, Illinois peaked in 2010 and as of November 2017, was at the level it was in 2005, and continuing to decline.

[edit] Looking at the Per Capita Personal Income in Springfield, IL (MSA) shows a steady increase since 1970, but this chart relies on whose data is collected. It could reflect the growth of income inequality. In other words, poor people earning less while wealthy people earn more. Wages have been stagnant over the last 30 years, while capital gains increased dramatically.

The unemployment rate in Springfield, IL according to FRED seems to be declining almost in a similar fashion as the Civilian Workforce, meaning the unemployment rate is lower because there are fewer jobs and fewer people.

So, imagine what a tax increase would do to Springfield. Some factors include the following:

• People inextricably tied to their home because the mortgage is "underwater" or there are no buyers looking.
• People in retirement or nursing care facilities on fixed incomes.
• People inextricably tied to a government job that requires them to reside in or around Springfield.
• Businesses whose customers are most frequently the people listed above.
• Crain's: Slow growth, aging population plaguing Illinois.

Eventually, the tax burden will fall on who remains in town. It might be wise to relocate people away from the oldest, most vulnerable infrastructure and close off those older parts of Springfield until such a time as industry returns to the area.