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Competitive Advantage Will Rule

Today's business news carried a story that the Courts in Illinois have ruled that businesses in Cook County can no longer escape paying sales taxes on major purchases such as fuel oil and other products used by their businesses.  This was previously legal but no longer.  As usual the news article did not report on the potential, if unintended, consequences of this ruling.  For if the additional sales taxes are a significant enough cost to place the firms at a competitive disadvantage, which seems possible and perhaps likely, then the firms will choose to locate somewhere other than Cook County where the sales taxes are lower.
We have already seen this happen with the State business income tax which is higher in Illinois than in some of the neighboring states.  Economic choice and competitive advantages will rule when the state chooses to make the cost of doing business sufficiently to warrant a change.

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