Chicago Mayor Brandon Johnson is considering reintroducing a corporate head tax that was abolished over a decade ago. This proposal aims to address the city’s significant budget deficit.
Revival of the Corporate Head Tax
The proposed head tax would apply to businesses with over 100 employees, imposing a monthly fee of $21 for each worker. The tax would adjust for inflation and would only affect companies with employees working in Chicago for 50% or more of their time.
Financial Implications
Johnson suggests that this head tax could generate around $100 million annually, contributing to reducing Chicago’s $1.2 billion budget shortfall. The city had previously enforced a similar tax between 1973 and 2014, which averaged $20 million in annual revenue.
- The previous head tax was $4 per employee for businesses with more than 50 workers.
- It was lowered to $2 in 2012 before being phased out by former Mayor Rahm Emanuel.
Industry Response
Local business leaders have expressed concerns about this proposal. Sam Toia, President of the Illinois Restaurant Association, labeled the head tax as a “job killer,” fearing it could hinder growth in Chicago’s restaurant sector.
Toia stated, “Restaurants used to work on nickels and dimes. Now they work on pennies and nickels, and this tax would further damage our industry.”
Additional Tax Proposals
In addition to the head tax, Mayor Johnson is proposing several other taxation measures, including:
- An increase in the cloud tax from 11% to 14%, projected to raise $333 million annually.
- A rideshare tax targeted at high-traffic areas, estimated to generate $230 million yearly.
- New taxes on social media companies, online sports betting, and yacht mooring.
Business Exodus from Chicago
Recent years have seen significant business relocations from Chicago, including high-profile corporations such as Citadel, Boeing, and Caterpillar. These departures raise concerns about the city’s corporate climate as Mayor Johnson seeks to increase tax revenue.
With the proposed head tax and other financial strategies, Chicago aims to recover from its budget shortfall, but the effectiveness and repercussions of these measures remain to be seen.
