Chicago's 'job killer' corporate tax plan rejected by committee

Chicago Mayor Brandon Johnson's proposal to levy a $21-per-employee, per-month tax on companies was shot down by a city council committee on Monday.

Members of the city council's finance committee rejected the mayor's proposed revenue ordinance, which included the so-called head tax. Some aldermen opposed that tax on employers while others said they voted against the ordinance because the mayor's overall budget proposal doesn't include enough cuts and would lean on bonds to pay for salaries for firefighters and settlements.

The ordinance was part of a plan to raise roughly $586.6 million in additional revenue from various types of companies and business activities. Johnson also has proposed launching a social media amusement tax, raising the levy on cloud computing, expanding a congestion tax zone, and taxing hemp and online sports betting. The committee's move intensifies a standoff between aldermen and Johnson who said on Monday he would veto any property tax hike. 

"There are two options here. We challenge these big corporations and the ultrarich to put more skin in the game or you ask people who are standing in line for bread, milk, food and clothing, ask them to put more skin in the game," Johnson said in a press conference. 

The business community fiercely opposed the proposed head tax, saying that it would incentivize companies to relocate out of the city and overburden some of Chicago's largest employers. A previous $4 corporate head tax expired roughly a decade ago under former Mayor Rahm Emanuel, who had dubbed it the "job killer." Johnson's administration said its proposed per-head levy of $21 reflects inflation.

Johnson said he does not plan to back away from the head tax and is open to negotiations with lawmakers. Though, his prior proposal has faced an uphill battle in the city council. Alderman Brian Hopkins, whose ward includes the wealthy Gold Coast and Streeterville neighborhoods, previously described Johnson's proposed spending plan as "dead-on-arrival" and said he would vote no. 

The first-term mayor and progressive Democrat is facing a $1.2 billion deficit for 2026 and on Monday framed the debate as between supporting working and poor people or corporations and the ultrarich. Further complicating the spending plan is the Trump administration's funding freezes and threats to limit the money flowing into Chicago and other major cities. 

"We are calling on city council to work with us to pass a budget that does not include a property tax increase or additional taxes on garbage or groceries," Johnson said. He is calling for a recess until the first week in December so aldermen have more time for budget negotiations.