Chicago is facing a serious problem. Since 2001, we’ve found ourselves in a period of consistent budget shortfalls. In fact, if projections hold through 2027, we’ll have faced 27 consecutive years of budget deficits as city expenses continue to balloon.

Addressing this deficit, especially as we approach the depletion of critical covid relief funds, which are set to run out in December 2026, has been a priority for Mayor Johnson’s administration. While we agree that addressing this issue is critical and presenting an austere budget proposal is certainly in order, Mayor Johnson’s plan to tax some of the city’s largest employers during a period of corporate exodus from the city and state runs counter to the goal of attracting the investment we need to expand the tax base.

Mayor Johnson’s $600 million tax package already failed earlier this month in the City Council’s Finance Committee, and for good reason. It proposes to dramatically raise the price of doing business in Chicago by controversially taxing the city’s biggest employers at a rate of $21 per employee. As the city’s business community continues to warn, passing such a tax risks pushing businesses outside the city and state, jeopardizing the slow uptick in growth and investment we’ve managed to achieve as we steadily recover from the pandemic’s impact.

Yet, as the head tax looks less likely to remain a part of the final budget proposal, Mayor Johnson has now shifted his attention to a different provision—the Social Media Amusement Tax.

Johnson’s plan would impose a $0.50 monthly fee per active user on social media platforms with over 100,000 users that operate in Chicago. Not only would the tax be legally dubious, considering federal law prohibits the imposition of “discriminatory taxes on electronic commerce” under the Permanent Internet Tax Freedom Act (PITFA), but its burdens would undoubtedly be passed down to consumers and small and medium-sized businesses.

While Mayor Johnson might argue that platforms could absorb the costs of his tax plan, higher costs for platforms operating in Chicago risk forcing their users to pay higher subscription fees, face new charges for what might otherwise be free services, or reduce access by forcing out smaller platforms. At the same time, because the plan requires platforms to verify the residential addresses of active Chicago users to determine their tax liability, it could also mandate the collection of sensitive location data, which we should all be wary of.

For small businesses, a new tax on the social platforms they often rely on for digital advertising could significantly increase the cost of their online presence—reducing their access to the targeted ads needed to compete in today’s digital economy.

Just as the floated corporate head tax was a non-starter for Chicago’s aldermen, so too should the Social Media Amusement Tax.