Chicago mayor floats reviving tax on corporations to raise cash

Chicago Mayor Brandon Johnson is considering reviving a tax on corporations to help raise revenue and balance the city’s budget. 

A so-called corporate head tax is “on the table” as officials look for funds to help close back-to-back yearly shortfalls topping $1 billion, Johnson said at a press conference on Tuesday. A head tax is typically levied per employee hired by a business, so larger corporations are more impacted than smaller companies.  

“It’s an option now,” Johnson said in response to reporters’ questions about such a levy. “Everything has to be on the table.”

The Windy City used to charge a per-employee tax more than a decade ago, but it was heavily opposed by the business community. Former Mayor Rahm Emanuel eliminated the rate in 2014, dubbing it a “job killer.” 

Chicago’s corporations have complained about the rising costs to do business in the city and slower economic growth compared to other areas of the U.S. Several marquee companies have relocated including the financial conglomerate Citadel, which moved to Miami, and Boeing Co. which left for Arlington, Virginia. 

Reviving the corporate head tax is among the options Johnson is considering as he crafts a spending plan for 2026. Like many municipalities, Chicago is contending with a depletion of federal pandemic-era aid coupled with higher costs of labor and services. The third-largest US city also has billions of underfunded pension obligations. 

A budget working group the mayor established is looking at new revenue options. Payment in lieu of taxes — known as a PILOT — for some institutions is also under review, Johnson said. The mayor campaigned on a progressive platform aimed at reducing the burden on the city’s poor.

“It’s important that we look at in a very meaningful way how those individuals with means, particularly our billionaires and ultra-rich, who have benefited from a growing economy, can put more skin in the game,” Johnson said. “The ultimate goal is to grow the economy. It’s not about billionaires versus everyone else.”

Still, several of his proposals haven’t gained traction. A ballot measure to hike the tax on home sales worth more than $1 million failed and last year city council members voted against his proposal to raise property taxes by $300 million. 

Johnson on Tuesday pushed back on any suggestion of a slowing economy. He noted that overall corporate relocations are up and traffic at O’Hare International Airport is rising. Chicago is also among the top cities for the number of millionaires. He underscored that the ultra-rich and corporations in the city need to contribute as he works to improve public safety and affordable housing. 

“When corporate leaders come to me, you know the number one issue they talk about is safety,” Johnson said. “They don’t talk about job killing.”