Editorial: Mayor Johnson offers multiple ideas to scare businesses out of Chicago

Yahoo

4 days ago

We wrote a few days ago that we'd wait to see what Mayor Brandon Johnson had in mind when he said he would pursue 'progressive revenue' options rather than a property tax hike to help plug Chicago's $1 billion-plus deficit for next year before passing judgment.
It didn't take long for Johnson to put some meat on the bones.
In outlining his ideas for reporters on Tuesday, the mayor opted not to wait for his mayorally appointed working group striving to meet an Aug. 31 deadline to report on initial ideas for making city government more efficient, as well as considering options to raise revenue.
Among the possibilities the mayor said 'have to be on the table': reviving the corporate head tax; imposing a thinly disguised corporate income tax; and 'asking' universities, endowments and other large-scale nonprofits to pay substantial sums in lieu of the property taxes from which they are shielded.
Before we get to the substance of these extraordinarily counterproductive ideas, let's address Johnson's foolishness in front-running the report his working group of business figures, labor leaders, nonprofit representatives and others are slated to produce in a month. The whole idea of creating that ad hoc group back in the spring was to try to forge some kind of rough consensus on how to dig the city out from its structurally imbalanced budgets year after year. The impetus was to avoid the sort of top-down budget dictates that got Johnson into so much political trouble when he broke his campaign promise not to raise property taxes and proposed a $300 million increase — which aldermen then unanimously rejected.
So much for that approach.
By saying he's on board with several highly controversial tax proposals before his group even weighs in, Johnson now has confirmed, at least in the minds of his numerous skeptics, that the exercise always was little more than window dressing for an administration bent on doing what it has wanted to do from the start — soak the 'rich' in order to bankroll an ever-growing government apparatus.
We sought reactions to the mayor's remarks from several participants on that working group and were told they're operating under nondisclosure agreements. Of course such pacts don't apply to the mayor himself, who's free to undermine this effort before it produces anything while forcing those who've risked their reputations on behalf of the city to keep their mouths shut. We wouldn't want to be part of a group that wasn't given the freedom to reach its own conclusions before the boss had laid out his agenda.
Of the various 'progressive' tax ideas available to Johnson and the dwindling number of aldermen who support him, the one with the fewest roadblocks is the corporate head tax, the per-job levy that Mayor Rahm Emanuel rightly killed in 2014. The obvious reason for ending the head tax back then is just as valid today: Taxing businesses based on the number of people they employ is a disincentive to hire people.
As a matter of public policy, the city ought to be in the business of encouraging the private sector to employ more people, not giving businesses more reasons to reduce their head count.
In 2025, the issue is starker than it was more than a decade ago. With the rise in artificial intelligence, companies nationwide already are laying off workers who are performing functions corporate leaders believe AI can do instead. If Johnson truly wants to jump-start AI-induced white-collar employment losses in Chicago, there are few more effective ways than bringing back the head tax.
Will the City Council have any appetite to send such a terrible message to job creators at a time when Chicago's economy is flatlined (the mayor's Donald Trump-like claims that growth is surging here notwithstanding)? We doubt it.
That leaves a more pernicious proposal pushed by the nonprofit Institute for the Public Good, which has a representative on the mayor's working group. Based on a tax Seattle approved several years ago, that group has floated an 'excise tax' on payrolls for those making $200,000 or more (including stock options and various forms of noncash compensation) — meant to substitute for a corporate income tax that Chicago doesn't have the legal authority to impose.
The organization estimates a 5% payroll tax along those lines would generate $1.5 billion annually. Ald. Maria Hadden, 49th, who co-chairs the City Council's Progressive Caucus, told Crain's she'd consider such an approach if nonprofits like hospitals and universities were exempted. That still would generate more than $1.1 billion, she said.
That proposal isn't likely to trip up on the AI issue outlined above, but also could be easily evaded by companies moving their operations outside the city and basing their more highly compensated employees in, say, Evanston, Oak Park or any other suburb. Especially given the ease of remote work these days, such moves wouldn't be difficult.
The city already is seeing substantial reductions in its white-collar workforce, statistics show, a trend that surely exacerbates municipal revenue challenges and too much of the time keeps downtown Chicago something close to a dead zone. Any kind of excise payroll tax is a truly terrible idea.
Johnson told reporters repeatedly that business people with whom he's interacted tell him they mainly care about violent crime and that the cost of doing business doesn't come up. 'Not that I know a bunch of millionaires,' he said. 'But you know what they talk about when they engage with me? They talk about community safety. They don't talk about taxes.'
This is a mayor with no experience in the private sector, and it shows over and over again. To suggest businesses (or the 'ultra-rich,' as the mayor likes to call the wealthier among us) care not a whit about a key cost input like taxes is laughable.
If aldermen out of desperation decide to try this gambit, the city will be sued and the matter will be tied up in the courts. At the very least, the 2026 budget hole won't be plugged this way.
True to form, the mayor expounds at length on various and sundry ways to part people and businesses from their money and does little but nod briefly and generally to reducing the cost of government. The budget process hasn't even started, and Johnson already has ruled out any concessions from unionized city workers like layoffs or furloughs to balance next year's books.
By once again focusing only on economically destructive taxes that we're guessing won't get far with skittish aldermen afraid to tie their political futures to a deeply unpopular mayor, Johnson risks a reprise of last year's eleventh-hour budget crisis.
We're wasting time.
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