Perhaps the worst part of the job has to be the crafting of the annual city budget, one definitely designed to leave some winners and losers crying foul with mail drops of negative flyers, dive bombing of email inboxes on why nothing proposed will ever work, cue the devil in the details coming to the fore waving his pitchfork, followed by the opening of the doomsday book; and, Mayor Brandon Johnson has found out the hard way when months ago he gathered his advisors to handle a $1.2 billion shortfall, hamstrung by the usual culprits: increased health care costs for city workers, police and fire pensions, mandatory contributions, the dearth of COVID era federal monies and Trump era cuts.
For his critics, and there are many, the worst idea was the so-called “head tax" that by definition places a tax per employee on workers of a certain size at a predetermined amount. And while Chicago has had one in the past, under Mayor Rahm Emanuel in 2014, who quickly dropped it; but, for Johnson, as opposition grew he revised it to $33-per-employee to companies with 500 employees, 175 corporations instead of 1,000, but the mayor still faced brickbats, and critics labeled it a job killer and predicted that major corporations would leave the city in droves.
The monies received would act as a "public safety” to help tackle the many challenges of public safety across the city; and, while car jacking have lessened from two years ago, there are still enough robberies, muggings and beatings to warrant such an effort plus the steady uptick of crime on the city’s El trains, mostly occurring on the Red line, but there was also the recent burning of a woman on the Blue Line.
Johnson stressed that, ".0008 percent could literally create thousands of opportunities for people to drive violence down. I cannot think of a better investment that our city can make than in investing in the things that keep people safe."
In an attempt to pass the plan as a progressive standard, the mayor said it was also a much needed cry to tax the wealthy and have them pay their fair share, a sentiment not unfamiliar over the last decade that echoed across both the liberal and progressive political spectrum.
Others felt differently, the Illinois Restaurant Association tagged it a job killer, even Gov. JB Pritzker was opposed,but there is a long history, and WBEZ took to the stacks to give us some background: “For as long as it’s been alive, Chicago’s employer head tax has been derided — in one colorful way or another — as a job killer.”
“It’s much more than a head tax… it’s a scalping tax,” said the late Ald. John Hoellen (47th) in an hour-long debate four days before Christmas in 1973 when the council approved the policy.
A decade later, even progressive former Mayor Harold Washington said he wanted to reduce and then nix the disfavored tax — requiring companies to pay $4 per month for each person they employ — “in order to stimulate economic growth,” though he never did.
In 2011, when the City Council voted to slash and repeal the policy by 2014, former Mayor Rahm Emanuel applauded Council members and declared, “The head tax is a job killer.”
“Fifty-two years after its inception, those talking points have endured as Mayor Brandon Johnson’s attempt to revive a version of the hated head tax — at $33 a month for employees at companies with 500 or more workers — faces staunch opposition from a group of City Council members sensitive to the concerns of Chicago’s business community.
But the actual effect of the head tax on employment is unclear.” [an] “analysis of city tax data and publicly available economic data, reviewed by four economic and labor experts, found a lack of evidence that Chicago’s previous head tax, or its repeal, is to blame for job loss or growth in Chicago.”
“It really is hard to assign any kind of causation to the head tax,” said Audrey Guo, an economics professor at the Santa Clara University’s Leavey School of Business, who has written two leading research papers on the impact of payroll taxes on employers.”
Ralph Martire, the executive director of the Center for Tax and Budget Accountability told WBEZ,“The city of Chicago has more to offer for business in a business location than suburban Cook does, generally speaking,” he said, pointing to Chicago’s post-pandemic recovery that also has appeared to outpace the suburbs.”
In agreement, “Civic Federation President Joe Ferguson said he, too, has not seen compelling evidence that would constitute calling the head tax a job killer:
Since the city does not keep tabs on how many businesses are in the city with 500 plus employees, their conclusions are at best, estimates.
One very important note, well over forty years ago the then Mayor Richard J. Daley could not wean himself off all of the revenue that supported essential city services such as fire police, sanitation,etc,
Income inequality, the previous concern two decades ago, has now morphed into affordability; and, addressed most recently in the New York mayoral election by candidate Zohran Mandami, now mayor elect, is a key point for any discussion of head taxes, with the effect most keenly felt on those making well below the $100,000 threshold.
Johnson, a former Chicago Teachers Union organizer, and teacher, who had the backing of the CTU to gain office, has continued to hold their support, and in part they issued this statement:
“Seventy-one percent of Chicagoans support taxing large corporations instead of raising fees on working families, and 74 percent say they’re less likely to vote for an alder who raises fees on residents instead of taxing corporations,” the CTU said.
Within that vein, in a move that many City Hall observers called unprecedented, CBS News Chicago reported last week that “The City Council approved a $16.6 billion spending plan opposed by the mayor last week; with a 29-19 vote to approve the tax revenue package to fund it on Friday and a 30-18 vote to approve the rest of the budget on Saturday.”
“In lieu of the controversial corporate head tax backed by the mayor, his opponents' budget will rely on an increase in the city's plastic bag tax; overhauling the tax on off-premise liquor sales; legalizing video gambling terminals in Chicago; and opening up new advertising opportunities, such as naming rights for bridge houses along the Chicago River, selling banners on light poles, and placing ads on city vehicles.
It also proposes bringing in nearly $90 million from selling some debt owed to the city for unpaid fines and fees, including parking tickets, ambulance fees, and water bills.
In a bid to limit the impact of that debt collection on the city's poorest residents, Johnson signed an executive order prohibiting the city from selling individual city-administered medical debt, such as ambulance fees, and establishing rules for selling debt owed to the city.”
Simply put, the alternative package from the opposing alders is based on regressive taxes and those taxes put the burden firmly on lower income residents. And, with that in mind the mayor will not sign the legislation, nor will he veto it, avoiding a potential onslaught of a city government shutdown but called it “morally bankrupt” despite the fact that it retains 98 percent of what he wanted, and when asked by local media why he won’t sign it, he said,”“Because there are some elements of this budget that, quite frankly, I don’t want to give a signal to the people of Chicago that I support what I believe is one of the most detrimental and immoral aspects of this budget,”
Not all alders were on board with this budget and one of the most prominent is Alr. Maria Hadden (49th-D) who said in her December newsletter, “It has been hard to cut through all the noise surrounding the 2026 budget negotiation process. In short, I have grave concerns that the alternative budget proposal is balanced on the backs of working Chicagoans, relies too heavily on speculative numbers and assumptions, will create a mid-year shortfall, and that the process surrounding the alternative budget proposal lacked transparency and basic principles of good governance.”
Regressive taxes, as Investopedia notes, are “Unlike a progressive tax system where tax rates increase with income, regressive taxes like sales, excise, and payroll taxes affect everyone equally but take a larger portion from those who earn less.”
Racing to meet the end of December deadline she noted that the process seemed rushed was also a significant factor along with a lack of transparency and said, “I can’t support a process that I find opaque and rushed. I also cannot accept a process that circumvents scrutiny. Chicagoans deserved better, and I hope this can be a lesson for all in future budget negotiations.”
