Mayor Brandon Johnson has unveiled a $16.6 billion budget proposal for 2026, aiming to address a projected $1.15 billion shortfall in Chicago. This budget outlines an array of new taxes targeting corporations and online platforms, including a substantial increase in the employee head tax and the introduction of a social media tax.
Key Features of the 2026 Budget Proposal
- Budget Size: $16.6 billion
- Forecast Deficit: $1.15 billion
- Employee Head Tax: Increased to $21 per employee per month for companies with over 100 workers
- Cloud Computing Tax: Raised from 11% to 14%
- Social Media Tax: First of its kind, set at $0.50 per user after the first 100,000 users, aiming to raise $31 million
- Total New Tax Revenue: $586.6 million expected from progressive taxes and fees
Targeting Wealth Inequity
During his address, Johnson emphasized that Chicago is among the wealthiest cities globally, housing 127,000 millionaires and 24 billionaires. However, he pointed to alarming poverty rates, particularly among youth, noting that one in four Chicagoans under 18 lives in poverty. He stated, “Our budget proposal asks large corporations and the ultra-wealthy to chip in more so that working families are not burdened with higher property taxes.”
Notable Taxes and Revenue Sources
The proposed budget includes a few key initiatives:
- Revived Employee Head Tax: Rebranded as a “community safety surcharge,” this tax could generate an additional $100 million annually.
- Increased Cloud Computing Tax: Aiming for $333 million in annual revenue, this tax would see a 27.2% increase.
- Social Media Tax: This new tax aims to fund mental health initiatives and community safety programs.
Concerns from the Business Community
Local business leaders have raised concerns about the potential impact of these taxes. Jack Lavin, President of the Chicagoland Chamber of Commerce, argued that the taxes could hinder employment prospects and corporate growth. He labeled the cloud computing tax as potentially the “highest in the nation,” noting it could negatively affect hiring trends.
Investments in Community Safety
Johnson’s budget dedicates funds to community safety initiatives, including:
- 30,000 summer jobs for youth
- Support for community violence intervention programs
- Funding to improve mental health services
The plan also establishes a “protecting care fund” funded by the social media tax, aimed at expanding access to mental health resources and community care teams.
Fiscal Context and Future Outlook
Johnson’s budget poses significant challenges, especially given previous reliance on temporary tax revenues to balance finances. The mayor aims to navigate tight fiscal constraints while implementing his progressive agenda. Critics warn that the heavy taxation may provoke a business exodus from the city.
In response to anticipated opposition, Johnson’s administration is committed to isolating the revenues from these taxes for community programs, as the mayor seeks to create a balanced approach to budgetary pressures while supporting social initiatives.
As the budget process unfolds, Johnson hopes to garner support from both progressive allies and concerned business leaders, striving towards a comprehensive and equitable fiscal plan for Chicago.
