Support for Level Playing Field on Taxation

I am writing to alert the City of Highland Park and area state and federal legislators to pendinglegislation which could have positive financial ramifications for Illinois and Highland Park. A couple ofweeks ago the US Senate passed a non- binding resolution by a vote of 75 to 24 in support of S.336,”The Marketplace Fairness Act”. If passed this bill would give state and local governments the power tocollect taxes on internet sales originating within their respective boundaries. When the internet was inits infancy sales were not taxed in order to help grow e- commerce. That stage of infancy has long sincepassed.

At the time of this writing States can only collect taxes generated by internet retailers with a physicalpresence within each state. Further, the onus for tax collections is on internet shoppers. They arerequired to report their purchases on their state tax return, and, in turn, pay up. Most shoppers do notknow this and, as such, a scant amount of revenue is collected. The new law would require businesseswith over $1.0mm in sales to collect sales taxes and remit the same to states where the sale originated.

Why is this important for Highland Park? . When I was Mayor the sales tax was the largest source ofrevenue in the General Fund. This resulted from a vibrant economic base. I believe the same is truetoday.

Related to this is the fairness aspect of the bill. Not taxing internet sales puts bricks and mortar retailersat a disadvantage. If one looks around downtown there seems to be a plethora of vacancies (e.g. Saksand Corner Bakery). In addition, many of the new businesses coming in seem weighted towards serviceswhich are not taxed.

If passed the” Marketplace Fairness Act” is estimated by to generate $400mm annually to the State ofIllinois. The City of Highland Park would receive a portion because the State must remit one percent ofits 6.25% sales tax to the City where the tax originated. In addition, the City has a home rule sales tax of1%, which may also be collectible under the Act.

Nobody likes to pay sales taxes but it is a source of revenue that enables the City to provide a high levelof service to its residents. It should also be noted that the sales tax also reduces the City’s relianceon property taxes , a much harder tax to pay. Our downtown is the envy of the North Shore, in part,because of the quality of its retailers. This holds true for Route 41, Crossroads, Ravinia and Briergate aswell. This tax will level the playing field for Highland Park business which currently must compete with ecommerce at a disadvantage.

My message to the City and area state legislators is too go on record through their own resolutions andor letters in support of S.336. Also enlist the Business Alliance and the Chamber to do the same. This willprotect our business community and keep Highland Park fiscally sound. One final point, we should begrateful to Senator Dick Durbin as he is the lead sponsor on the bill and has been a leader on this issuerecognizing its importance to the State and communities like Highland Park. He should be thanked.

Michael D. Belsky
Mayor of Highland Park (2003-2011)
1008 Deerfield Road
Highland Park, IL. 60035
847-926-5727
312-953-5449