Chicago's City council on Wednesday voted to abolish the city's "head tax," a $4 per-employee tax on all businesses with more than 50 workers.
Mayor Rahm Emanuel branded the tax a "job killer."
"Eliminating the head tax is the right thing to do for businesses big and small," Emanuel said. "With this, Chicago can become an even better place to start a business."
The city's head tax generated a total of $35 million in 2009 and 2010 combined, but Emanuel has promised to offset that revenue.
He said phasing out the tax will help encourage businesses to hire more employees and the $20 million in revenue returned to them will increase consumer consumption.