Progressives want to bring back the head tax in a big way

Some aldermen also want to boost the hotel tax and require wealthy nonprofit institutions that receive tax exemptions to make payments to the city. Here's what's on their wish list.

September 18, 2019 07:31 PM

by A.D. QUIG

Chicago City Hall

As promised, progressive aldermen are teeing up their proposals to plug the city’s $838 million budget hole, including a $35 head tax for businesses with more than 50 employees, asking “wealthy nonprofit organizations” to begin making payments to the city and boosting the hotel tax.

The city’s most progressive aldermen—many of them freshmen—have called on Mayor Lori Lightfoot to tax the rich and wealthy corporations, instead of the working families of Chicago, to help the city’s ailing coffers.

Lightfoot has said her priorities for the upcoming budget are to seek reasonable options that relieve "the financial burden on those least able to afford it" while "not driving businesses out of Chicago."

The mayor explicitly said she was against a "LaSalle Street tax" on financial transactions and the reinstatement of the corporate head tax that Mayor Rahm Emanuel eliminated by 2014. Under that version of the tax, companies with 50 or more employees earning at least $4,300 every three months paid $4 per month per employee. It brought in roughly $23 million a year, according to the Chicago Tribune.

Under a proposal from Ald. Rossana Rodriguez Sanchez, 33rd, businesses with more than 50 employees earning at least $1,000 every three months would pay $35 per month per employee. There would be carve-outs to exempt employees who live in the city’s most violent areas.

“Chicago’s budget deficit is in part caused by a lack of political will to tax the wealthy,” Sanchez said in a statement, pegging the potential annual revenue of this new head tax at $100 million. “Chicago’s working families have borne the brunt of years of austerity budgets, and now it is time to find bold solutions that require the wealthy to pay their fair share for the city we need.”

A separate proposal from Ald. Jeanette Taylor, 20th, would follow in the footsteps of some other cities that negotiate a payment in lieu of taxes—or PILOT—from nonprofit institutions that traditionally receive exemptions on many taxes.

Boston, Providence, R.I., and New Haven, Conn., have PILOT agreements with major tax-exempt schools, hospitals and cultural institutions that call for them to make a voluntary payment to the city, in cash or through community programs, to offset the cost of city services they consume. Boston’s is based on an institution's tax-exempt property value.

Taylor said her idea was aimed at large institutions that have displaced black Chicagoans, including hospitals like the University of Chicago, Rush University and the University of Illinois at Chicago.

“The University of Chicago has not only taken over Hyde Park, but also Woodlawn. Rush took over a lot of the West Side; same thing with UIC,” Taylor said. “Historically those have been black communities, and they force folks out.”

“This is just the start, just a resolution to start,” Taylor says.

Ald. Carlos Ramirez Rosa, 35th, has also introduced an ordinance concerning the city’s hotel accommodations tax. A progressive coalition Rosa belongs to proposes hiking the hotel tax to 7.5 percent from 4.5 percent, arguing it would net the city $75 million in annual revenue.

The current hotel tax is on track to generate $45.6 million in 2019, according to the city’s 2020 budget forecast.

Bob Reiter, the president of the Chicago Federation of Labor, an umbrella organization for local unions, came out against the proposal, saying Rosa's proposed rate would bring Chicago hotels up to the top tier of the costliest tax rates for cities, hitting convention business. "I'm well aware of the implications of a hotel tax. I work with Unite Here," Reiter said, referring to the labor group that represents many hotel employees. "I sat with them during the strike. I work with Choose Chicago. I used to be on the board of McCormick Place."

A bigger hotel tax would draw convention business to more affordable locations like Orlando, Fla. It's "gonna be regressive" and "crush" the ability to grow the city's union workforce, hitting the wages of women and people of color who work in hotels, Reiter said.

Lightfoot has said she wants some of that money to go to help local artists, but earlier this year she shied away from calling for an additional hike to the current rate, telling the Sun- Times, “Increasing it is not gonna help our entertainment and hospitality industries,” and tourism has “gotta continue to be huge.”

Poster Comment:

Some fools never learn.