Mayor Brandon Johnson is resurrecting his failed corporate head tax and proposing his third and biggest increase yet in a tax on equipment rentals and cloud computing that is already the highest in the nation.
The spending plan that will serve as Johnson’s re-election platform also seeks to nearly double the tax on sports betting, from 10.25% to match the current amusement tax to 20%.
By renewing his bid to impose a corporate head tax, Johnson is defying the line in the sand drawn by the coalition of conservative and moderate Council members who rejected the head tax a year ago.
In a letter to the mayor last month, 29 alderpersons established three boundary lines for the pre-election budget debate: no property tax increase, no “head tax or tax on job growth” and no counting on money from Springfield not yet approved.
Johnson is following two out of three of those guidelines by freezing property taxes and assuming no help from the state.
But he’s setting aside the most important boundary — by triggering another bitter battle for the head tax that his entrenched opposition has essentially declared “dead on arrival.”
To generate $101 million in annual revenue, Johnson’s latest version of the corporate head tax would be imposed at a rate of $25 a month per employee on businesses with more than 125 employees. That amounts to just 2.8% of registered corporations, according to the mayor’s office.
Last year’s version of the head tax was repeatedly revised and finally landed at a rate of $33 per employee on companies with 100 or more workers. In an apparent attempt to soften the blow, the Johnson administration is pairing the new version of the head tax with a tax credit.
It would allow employers whose work sites are located within Chicago census tracts designated as “socio-economically disadvantaged areas” to apply for a “full rebate” of the head tax. He’s also branding the per-worker levy an “Equitable Employer Tax.”
No matter what the mayor calls it, business leaders who bankrolled last year’s big bucks battle over the head tax likely will characterize Johnson’s measure as a job killer.
But it will at least allow the embattled mayor to connect with the progressive base of voters who helped put him in office, and say that he went down fighting for a budget that requires corporations to “pay their fair share.”
“There’s greater evidence of working people being pushed out of the city of Chicago than any sort of claim of the possibility of a business leaving Chicago. Working people are being forced out of cities across America. Corporations are not,” Johnson told the Sun-Times.
“As the wealth gap between CEOs and working people continues to spread, we have to decide what’s most important. Is it protection of a tiny, tiny, less than one-tenth of a percentage? Or is it worthwhile protecting families that are paying more in gas and groceries and rent than they’ve had to pay in a lifetime?”
The head tax will serve as Ground Zero for the budget battle, but Johnson is relying more heavily on a personal property lease transaction tax that has turned into a cash cow for Chicago.
It’s also been one of the few business taxes that Johnson has been able to raise with minimal resistance from the business community and the coalition of opposition alderpersons that he calls the “Corporate Caucus.”
The tax applies to businesses and individuals who lease personal property, software or cloud services. That includes everything from equipment, furniture and vehicles to movies and streaming services.
To generate an additional $234 million in 2027, the PPLT would rise by a whopping 33%. The tax now imposed at a rate of 15% would increase by five full percentage points — to 20%.
To soften the blow for everyday consumers, the PPLT that applies to car leasing would remain at 15%. Film and television crews using Chicago as a backdrop would get a break — from 15% currently to 11% to incentivize local productions.
“The PPLT has over-performed this year, bringing in hundreds of millions of dollars. And we remained the top destination for corporate relocation in the country,” Johnson said.
“This tax is gonna provide a lower rate for our film industry and it’s gonna keep the vehicle rate steady so people who are leasing vehicles won’t see an increase. But we are talking about these corporations that are experiencing rapid growth, with worldwide software expected to reach $1.4 trillion in 2026 alone… We’re talking about Google, Amazon, Salesforce. These big corporations that are making hundreds of billions of dollars in terms of profit margins. What we are expecting them to do is pay their fair share.”
The mayor’s budget also seeks to nearly double the tax on sports betting — from 10.25% to match the city’s amusement tax of 20%.
That’s expected to generate roughly $37 million in annual revenue. But only if it survives an ongoing court challenge by the Sports Betting Alliance made up of major sportsbooks like FanDuel and DraftKings.
“This is revenue that is generated from the companies — not the actual bettors. The additional revenue is not a direct charge to Chicagoans placing bets. It’s actually on the companies,” Johnson said.
Major sportsbooks have an ongoing lawsuit against the city, arguing that the authority for regulating and taxing sports betting rests exclusively with the state.
Last year, 30 Illinois House Democrats urged the City Council to spike Johnson’s proposal to tax online sports betting for fear that it would invite other municipalities to do the same, drive online sports betting underground and send state revenue on a tailspin.
To avert yet another point of political contention, the mayor’s budget will earmark $360 million for an advanced pension payment over and above the $2.79 billion statutorily required by law.
Last year, Johnson tried to cut the pension advance in half — only to restore it, delay it and ultimately make the full $260 million advanced pension payment after his City Council opponents demanded it.
Johnson is expected to deliver his fourth budget message to the City Council Wednesday.
That will be followed by two weeks of budget hearings that will give anti-administration alderpersons a forum to interrogate what has been a revolving door of city department heads.
By renewing his fight for a corporate head tax, Johnson is all but inviting another marathon budget stalemate.
Retiring Ald. Matt O’Shea (19th) is already predicting a “long, protracted, ugly budget season” that could drag on “right up to the deadline or even past it.”
Although Johnson got away with raising the so-called cloud tax for two years straight, O’Shea argued that the tax is now at the breaking point.
“Where we are now is the highest anywhere in the country. He wants to go even higher… You can’t keep going back to the same well. You can’t keep raising a tax that’s gonna hurt people who work out of their homes in addition to successful businesses,” O’Shea said.
“I’m very concerned that, if this goes up again, we’re gonna see a backlash. We’re gonna see people looking for other ways to avoid this.”
Pressed to identify his fallback if the head tax is once again rejected, the mayor would only say that he would “evaluate all of our revenue options” to bankroll what he called “investments that need to be made to support working people.”
“The most important part of this budget is ensuring that we’re investing in our young people. That we’re investing in our libraries. That we’re investing in community violence intervention workers who have demonstrated that their presence drives violence down,” Johnson said. “What we do know to be a job killer is when we disinvest on the West and South Sides of Chicago.”
Mayor Johnson renews fight for his failed corporate head tax 2026
IUSTITIA.BG – Investigations 2009-2026 2026-10-20 19:03:08
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