Opening the door for a couple polarizing profit taxes, Mayor Brandon Johnson may have activated the progressive itching of the base to see the campaign’s promise to “make a particularly rich part of his honest part”, but also saddens the business opponents that have already provided him in 2027.
Faced with a deficit of more than $ 1 billion and withdrawal of an increase in real estate tax, Johnson said last week that he would consider returning an employee’s head fee for companies or much bolder payroll fees. Any of them would be a big blow through the city corporation class arc.
On Tuesday, he told reporters that his administration would take a serious look at how “persons with measures, especially our billionaires and especially the wealthy, who have taken advantage of the growing economy, can involve more skin games,” contributing to the reduction of the city’s violence and the efforts of the home.
Johnson and his allies have described both business taxes just two of the many options that the mayor thinks can eventually be included in his budget offer this fall.
The Mayor of Business and Labor, Aldermen and Administration Heads regularly met behind closed doors to come up with new income and efficiency after Johnson said he would not be a real estate tax hike in 2026. At the end of last week, the mayor’s office shared its ratings on what can be increased by nearly three dozen or expanded taxes, tax or income schemes.
The idea of payroll costs came from a new group of thoughts associated with Johnson, called the Institute of Public Goods. Johnson cites the concentration of Chicago millionaires and billionaires from the end of July, although the source of these numbers was criticized as unreliable.
At the beginning of this year, Julie Dworkin, a non -profit organization, is a former Chicago Coalition Policy Head of Coalition to stop homelessness and bring a leader in Chicago Home Campaign, which was Johnson’s main initiative, and Ishan Daya, community organizer. Daya withdrew from the band, facing a previous video in which he torn down the Israeli hostage poster kidnapped by Hamas. He was replaced by Dworkin.
In their report, they proposed a new “company excise tax” that will charge a business with more than $ 8 million annual wages in Chicago. This rate would be 5% of the payroll costs to workers earning more than $ 200,000. According to the group, according to the census, this fee can increase the city’s annual revenue by $ 1.5 billion.
A spokesman for the Illinois Department said the agency does not collect information with sufficient detail to estimate exactly how much Chicago businesses pay more than $ 8 million, or employees with individual income over $ 200,000. However, based on the latest and comprehensive income the state protects the state, including wages, but also pension distribution, return on investment and other benefits, just over 93,000 persons in Chicago 2022. Reported that income was more than $ 200,000.
“It seemed like the only options offered to increase property taxes or reduce many jobs and city services. So we wanted to come up with a third road,” Dworkin said.
The fee would be well set, Dworkin said after 2017 Federal tax reduction and jobs law reduced the rate of income tax to a uniform rate of 21% compared to 35% of the highest level, and gave a lot of savings.
Shortly after Johnson publicly entertained the idea of excise tax, the business community retreated, claiming that this fee would not only discourage a new business and encourage movements from the city, but it would also be anti -institutional.
“If I am a business and I’m more mobile, whether I make a decision to come to Chicago, I was considering what was going on at the local level,” said Jack Avagin, President of the Chicago Chamber of Commerce.
With a non -business -sponsored groups such as Common Ground Collective and one future Illinois, already in preparation for progressive offers, the avalanche said that “the defeat of the Chicago” home and the Government head JB Pritzker’s income tax indicates that the wider business community is better to help.
“I also think that taxpayers are generally tired of the constant increase in taxes and (thinking): ‘What are we going out of it?”
But ald. Anthony Quezada, 35, the mayor’s ally, objected to progressive offers popular and that “people are tired” for “nickelization and weak small businesses, homeowners or consumers.”
The Aldermen essentially refused to go along with the proposed increase in Johnson fines and taxes on this year’s budget, increased the increase in garbage collection and alcohol tax and forcing mayors to completely abandon the real estate tax hike. They agreed to add charges for parking and plastic bags and went along with the mayor’s additional speed cameras to help close the deficit.
This year, most aldermen recognize that they have to pair new income with certain reductions or efficiency. Not only is it a political need to win a society, but it is also a fiscal reality that alone reduces the revenue could not fill in the gap.
According to Aldermen on Thursday with memoirs and Tribune, city officials estimated that the increase in the garbage tax could start from $ 19.6 million. USD to just less than $ 300 million. USD, taking into account the norm. The current city garbage collection program, which is paid $ 9.50 per month per home, is a $ 160 million deficit. However, some aldermen increase this charge may be caused by more political uprising than to increase real estate tax tax.
According to the memorandum, the additional alcoholic beverages tax could bring between $ 30 and $ 90 million, while the sales tax rate for services such as haircuts or accounting would be between $ 78 to $ 305 million, but the state law will need to be changed. A fee for online sports can be a fee of $ 8.5 to $ 17 million, Memo notes. The administration has not approved any specific proposal.
Ernst & Young is also looking for ways to recover the costs of creating special events and city penalties “to promote honesty and income generation”.
On Wednesday, Johnson marked a middle -aged budget report as a “clear turning point in the city’s finance”, indicating stabilizing income and decreasing operating costs. After a day, his administration accepted the recruitment of “responsibly managing costs and maintaining basic services,” the memorandum said he shared the Tribune.
The new recruitment freezing follows a similar measure of cost reduction that the city uses last year. This allows you to recruit many of the roles that generate revenue and safety, but stops minor travel and overtime for non -public safety work.
Although Quezada said he wanted time to check the institute’s profit tax offer, he appreciated the efforts to look for money to continue investing in violence prevention, mental health and affordable housing rather than looking for a reduction.
“We really need to move the narrative from saving and decline to growth and investment. Progressive income flows like this, such as this bold idea like this, start a really productive conversation,” Quezada said in Tribune.
The institute’s step is modeled after the salary fee of the Seattle Jumpstart 2020, but the group has doubled the highest price to provide their tax dollar estimates in Chicago. Today, Seattle taxes a business with wages of more than $ 8.8 million. USD and at least one employee earns more than $ 189,000. The tax applies to all annual compensation paid in Seattle. The rates range from 0.7% to 2.557% depending on the total wage.
Jumpstart has deposited $ 293 million in its first year. USD and 2024. – $ 360 million. Schools and independent contractors are not taxed.
However, the tax may be subject to significant fluctuations: the Seattle Budget Bureau said about 70% of taxes pay only 10 companies. Most of them are in the technology sector, so returns are particularly volatile during the oscillations of forgiveness or securities market, “since stakes scholarships make a major overlook compensation for technology workers.”
Dworkin said McDonald’s, Mondelez, United Airlines, as well as major local banks, laws and real estate development companies are likely to be those who will pay here.
Jumpstart has passed after a year of long -term Amazon. This received a significant city trade chamber, including the claim, and other business groups in the city center, which argued that the accusation was income tax, “camouflage as excise tax”.
As in Chicago, in Seattle, it is constant forbidden to charge your income tax. Jumpstart sponsors have successfully stated that the program is not income tax, as companies were banned from paying employees and the palace in 2022. In the summer, her appeal was abandoned. The collections continued throughout the court’s fight.
The avalanche and others provided that a similar Chicago fee, if accepted, would go to court.
“This is an income tax, so I don’t think it is constitutional; It will definitely be dealt with, ”the avalanche said.
The mayor’s office in the Tribune said she was performing a legal analysis of the institute’s proposal and different potential iterations.
A much more modest offer that nevertheless also receives a business distance, refund the company’s head tax. The Chicago City Council, headed by former Mayor Rahmas Emanuel in 2011, said Nixed Tuesday that the idea was on the table again.
Even before it was scanned, companies with 50 or more employees who earned at least $ 4,300 had to pay 4 per month for each of these employees.
The juice derived from the head tax may not be worth compressing Johnson: the city estimates that today’s taxation of $ 5 per employee would record just over $ 25 million, which would not do a significant tooth in a $ 1 billion deficit.
Johnson said the administration also “looked” at the pilot or payment instead of tax, program, as well as digital ad tax. Pilot programs aim to receive non -profit entities such as hospitals, universities, religious and cultural organizations that do not pay real estate taxes on voluntarily contribute to the city cash register.
One of the most successful efforts in the country’s pilot is Boston, which until 2023. Collected $ 35.7 million. USD cash.
However, Boston’s success took many years to create and relied on individual negotiations with entities. Repeating that in Chicago, it is not only time to take, but also complicates federal funding reduction in hospitals and universities.
Despite the resistance of the city’s business community, the longtime Chicago media and the political consultant Delmarie Cobb said the mayor could succeed with a set of progressive taxes.
“I think if the mayor is correctly presenting it, it will be progressively behind because it is the kind of creative thinking we asked for,” she said.
Emanuel did not get rid of (head tax) because he was concerned with poor people, he did so to make his rich friends feel good, “Cobb said. Progressive individuals “have to have the same aggressive thinking and actions when it comes to making money and making sure that people who suffer the most are not the people who can afford it.”
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(Contributed to Chicago Tribune Jake Sheridan.)
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