Chicago Mayor Brandon Johnson is proposing the revival of a corporate tax that the Windy City eliminated over a decade ago that businesses are warning would cost the city jobs.
Johnson is proposing a so-called “head tax” that would apply to companies with more than 100 employees and would levy a monthly $21 per employee on companies that meet the employment threshold.
The amount of the tax would increase based on inflation, and would be assessed based on the number of employees who work in Chicago 50% or more of the time.
The mayor sees it as a means of reducing Chicago’s $1.2 billion budget shortfall, and the city estimates it would raise $100 million annually.
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Chicago had a head tax in place from 1973 to 2014, raising an average of $20 million in tax revenue over that period. The tax amount was $4 per head for companies with over 50 employees – though it dropped to $2 in 2012 when the phaseout of the tax began under Mayor Rahm Emanuel.
Illinois Restaurant Association President Sam Toia told FOX Business Network’s Kelly Saberi that the head tax would be a “job killer.”
“I used to say before the pandemic, restaurants used to work on nickels and dimes. Now they work on pennies and nickels, and if we have this job-killer head tax, it’s going to kill jobs, and we’re not going to see the restaurant industry grow here in the city of Chicago,” Toia said.
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Johnson is proposing a series of other taxes, including on cloud services, rideshare services in high-traffic zones, social media companies, online sports betting and yacht mooring to help raise revenue.
The cloud tax, which is already in place and would rise from 11% to 14%, would raise an estimated $333 million in revenue annually. The rideshare tax would expand by adding a high-traffic zone and would raise a projected $230 million annually.
Chicago has seen several high-profile departures of businesses in recent years, including Ken Griffin’s Citadel.
Businesses that have moved their headquarters or significant portions of their operations out of Chicago include Boeing, Caterpillar, Guggenheim Partners, TTX and Tyson Foods.
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