As Chicago faces a projected $1 billion budget deficit for 2026, Mayor Brandon Johnson has floated a range of revenue-generating proposals, including reviving a corporate head tax and introducing a new payroll expense tax targeting large employers. While the need to address the city’s fiscal challenges is undeniable, the Chicagoland Chamber of Commerce believes these proposals represent the wrong approach by undermining job creation, economic growth, and long-term fiscal health.
In recent weeks, the Johnson administration has signaled a renewed interest in a corporate head tax, something the business community had hoped was left in the past. This tax would charge large businesses a fee for each employee they hire. Former Mayor Rahm Emanuel repealed the prior version of the tax in 2011 after it proved ineffective and damaging to business recruitment and retention efforts.
In addition to the head tax, the Mayor is exploring a proposal modeled after Seattle’s payroll tax, which would impose a 5% levy on corporations with global payrolls exceeding $8 million for all compensation tied to employees earning more than $200,000.
Chicagoland Chamber of Commerce President and CEO Jack Lavin has been vocal in expressing the Chamber’s opposition to these proposals. “The best long-term strategy to address budget deficits is growth,” Lavin told ABC 7 Chicago in a recent interview. “We need pro-growth strategies. These two taxes are direct deterrents on companies locating here, staying here, creating jobs here.”
In a comment to Crain’s Chicago Business, Lavin added that “the head tax and these other taxes are all disincentives for businesses to locate here or to expand here.” Lavin further added that “our businesses, which are creating jobs, they’re struggling with high property taxes, costly regulations and inflation. So right now the work should be to find cuts, to find efficiencies, to find shared sacrifice, not to immediately turn to raising revenue.”
Furthermore, business leaders argue that these proposals are being considered without first exhausting options for structural reform. “There must be efficiencies and shared sacrifice in there before we ask the taxpayers of Chicago and businesses in Chicago to pay more revenue,” Lavin said. The Chamber has long advocated for a balanced approach that includes cost-saving measures, modernization of city services, and careful stewardship of public dollars before turning to job creators for more funding.
The Chamber stands ready to work with City Hall and other stakeholders to advance constructive solutions that support fiscal sustainability without sacrificing jobs, investment, or Chicago’s reputation as a world-class business destination.