Chicago is broke, facing a $1.1 billion budget shortfall. Mayor Brandon Johnson recently revealed his plan to address it.
His $16.6 billion budget for the city hinges on $617 million in new taxes, particularly targeting big business, big tech, and wealthy Chicagoans. WTTW’s Heather Cherone joins today’s podcast to break it all down.
Johnson’s Proposal
Johnson is touting his proposal as the “Protect Chicago” budget. “ It is a completely new approach than we saw during Johnson's first two years in office,” Cherone said.
The approach would eliminate the city’s grocery tax, in line with a previous move by the state. Meanwhile, It would add:
- Another tax increase on cloud computing
- An expanded employee head tax
- A first-of-its-kind social media tax
- Increased congestion fees on Uber and Lyft
- Additional taxes on hemp products
- A so-called “yacht tax”
- Taxation of online sports betting
The largest chunk of new revenue — an estimated $333 million — would come from a 3% “cloud tax” increase, likely affecting software companies. This bump would make Chicago’s cloud tax the highest in the nation. But it’s Johnson’s head tax and social media tax that are making headlines.
The Social Media Tax
In an unusual move, Johnson proposed social media companies pay a tax of 50 cents per month per active local user. This would fall under the city’s amusement tax authority.
Johnson cited high rates of depression, anxiety and mental illness in young people as the reason to target social media companies. He compared it to the way we tax “other addictive vices” like tobacco.
That tax would raise an estimated $31 million for the city for free mental health clinics. However, it’s expected to face legal challenges.
No city has enacted something like this before.
The Head Tax
Johnson seeks to revive and expand the city’s head tax, charging large companies a monthly fee per worker. Employers with 100 or more workers would pay $21 per employee per month.
The city says this would affect roughly 3% of Chicago businesses and generate an estimated $100 million a year. Those funds would go toward violence prevention, youth employment, and mental health services.
Mayor Rahm Emanuel eliminated Chicago’s $4/month head tax in 2014. The increased rate reflects inflation, according to Johnson’s chief of policy.
Over the summer, the Chicagoland Chamber of Commerce called reviving the head tax “a step backward.” Now, Ald. Brian Hopkins (2nd) says it won’t pass City Council.
Johnson needs 26 votes to approve his budget before the Dec. 31 deadline.
Let the thunderdome begin.
