Mayor Rahm Emanuel introduced a proposal to eliminate the so-called employee "Head Tax" at Wednesday's Chicago City Council meeting.
During this year’s mayoral campaign, Emanuel promised to eliminate the tax, which requires businesses with more than 50 employees to pay $4 a year per employee. Emanuel is backing an ordinance which would reduce the tax to $2 in July 2012, followed by its elimination in July 2014.
When Emanuel visited the Ford Motor Co. plant on Torrence Avenue, company executives told the mayor the head tax made them reluctant to hire more employees, a message he relayed to aldermen.
"This has been a key part of our winning a Ford third shift," Emanuel told the council on Wednesday, a day after Ford the additional shift and the hiring of another 1,100 workers.
(Ford is actually adding the jobs because of a new contract with the United Auto Workers that will allow entry-level workers to start at $15.78 an hour, not because Emanuel is trying to eliminate the Head Tax.)
"The Head Tax is a job killer," Emanuel said. "Eliminating the head tax is the right thing to do for businesses big and small and it’s the right thing to do to secure Chicago’s future. Today we took a critical step in helping attract businesses to our city and enabling those businesses to create more jobs for Chicagoans."
The Head Tax currently raises $20 million a year for the city. Emanuel promises to offset that by "reduction in duplicative regulatory requirements and increased efficiencies," which is basically a variation on the old line about cutting the budget by eliminating fraud, waste and abuse.
Emanuel is desperate to be seen by Wall Street as a "business-friendly" mayor, and this tax cut will advance that image.
Ald. Tom Tunney (44th), owner of the Ann Sather restaurants, also spokes in favor of cutting the tax.
"I believe the economic impact will vastly outweigh the $23 million that we collect now. It has been flat. You know why it's been flat? Because nobody's expanding. Nobody's coming to Chicago," he said. "As I have said, the most important thing we can do is to provide every incentive for people to add to their payrolls. This will help create jobs, which will help the business climate and, ultimately our budget issues."