A tale of two cities

Benjamin Franklin once said, "In this world nothing is certain but death and taxes." For most people, this is a pretty morbid reality, but as a tax professional, it offers me job security. As true as that may be, I'd still like hold onto as much money as I can from what I earn.

Recently, I was on vacation in Nevada and spent a little time in Las Vegas. I've always found it interesting how two places (Las Vegas and Chicago) separated only by four states and 1,700 miles could have such drastically different local tax systems. As of November 2008, Chicago (Cook County) will have the nation's highest sales tax rate at 10.25%. It boggles my mind that when I shop in Chicago, I will actually be paying over 10% more than the price listed on a given piece of merchandise. Additionally, Illinois has a flat state income tax of 3%. Therefore, if you're in the 33% federal income tax bracket, you'll find yourself paying out 33% + 3% = 36% of your income in taxes. Then, with your remaining 64% of income, you'll be taxed an additional 10.25% on anything you buy in Chicago. Very exciting stuff - and I'm not even going to go into property taxes and various other taxes that many people face.

Las Vegas paints a very different picture. The sales tax in Vegas (Clark County) is only 7.75% and there is NO state income tax. On the surface, it seems like residents and visitors of Las Vegas get off easy and the local government is barely scraping by. The "tax" that most people forget about is the unofficial one known as gambling revenue. Las Vegas might be one of the only places in the world where tourists pay the residents' taxes as they come from thousands of miles away to empty their pockets on blackjack tables and in slot machines.

What's the bottom line here? If you're a gambling addict from Chicago, you're probably paying for Illinois/Chicago's taxes, and Las Vegas' taxes as well. Good job.