Same players, arguments appear in renewed corporate ‘head tax’ proposal
[October 23, 2026]
By Sean Reed | The Center Square
(The Center Square) – One part of Chicago’s newly-proposed budget under
consideration by the city council is a new per-employee tax on some
businesses in the city, which local business interests say is a
disincentive and the wrong way to bring growth and affordability to the
city.
Among Chicago Mayor Brandon Johnson’s proposed $17.6 billion budget is a
$25-per-employee monthly tax on large businesses outside of
disadvantaged areas, the Equitable Employer Tax, which the mayor’s
office said would bring in an estimated $113.8 million.
The tax would fall on companies with 125 full-time employees or more.
Johnson's budget says that it would impact 3% of the city's registered
businesses – which Johnson characterized as taxing “big corporations.”
Jack Lavin, president and CEO of the Chicago Area Chamber of Commerce,
said the tax wouldn’t just impact big corporations.
“Eli's Cheesecake employs over 125 people, you know, Friedman Seating,
these are all companies on the west side of Chicago. I mean, these are
companies that have 125 employees, they are not big corporations,” Lavin
said. “It gets back to the fundamental thing. We believe in a united
business community we cannot tax our way to growth.”
Johnson told constituents Thursday that the “head tax” won’t drive
businesses out of the city, but instead would allow the city to provide
and improve public services that will help residents to stay in the
city.
“There's greater evidence of life being lost and people being pushed out
of this city because of our inability to tax the rich and big
corporations than this fictitious notion that somehow by taxing
corporations is going to cause them to leave,” Johnson said.” “No, no
corporation is leaving Chicago.”
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Last month, a group of 29 Chicago aldermen told the mayor they would
work on a budget that includes no head tax or tax on employers,
after the proposal was already rejected by a majority of the council
last year.
Lavin echoes the same issues opposition to the tax had last year.
“A year ago you had a task force of the mayor’s, business and civic
leaders and a consulting company hired to look at cost reforms. So
where are those cost reforms? We haven't seen them. All we see are
more taxes,” Lavin said.
Johnson said there are exceptions to the tax so many businesses that
aren’t major corporations would be exempt from it.
“What this revenue source does, it obviously works to fund the
critical services that everybody agrees upon, but if your business
is less than 125 employees, you're exempt from the equitable
employers' tax,” Johnson said.
He also said that if employees work more than 50% in disadvantaged
areas, like in parts of the South and West sides, those employees
would make businesses eligible for a tax credit in addition to being
exempt.
Lavin said it isn’t just top corporations in the city that would be
hit with the tax, even with the exemptions.
“They say large corporations, but it's not large corporations. It's
everyday businesses in Chicago that are going to pay this tax and
then that either leads to higher cost for consumers or less jobs for
residents of Chicago,” Lavin said.
The majority of revenue brought in by the tax would come from the
largest employers in the city, meaning small portions of the total
expected revenue could be foregone if the 125 employee figure were
raised.
Jim Talamonti contributed to this story
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