Head tax hitting up the rich would hurt everyday Chicagoans

While Mayor Brandon Johnson claims his budget proposal is designed to target the “ultra-rich,” a deeper look at his policy initiatives reveal ill-conceived ideas that are likely to increase grocery deserts and drive up food insecurity in poor and middle-income communities across Chicago.

That’s because the mayor's proposed head tax, which would charge businesses with more than 100 employees $21 for every job created, would devastate grocery and restaurants chains of all sizes — not just the larger corporations he highlights. Grocery stores and restaurants employ many workers. It only takes two or three locations for independent operators to hit the 100-employee threshold, when they will be punished simply for putting people to work.

To be clear, the head tax is bad policy for businesses of all types and sizes. Chicago should be encouraging job growth — not taxing companies for hiring workers. But the impact on grocery stores and restaurants is outsized, as these two sectors of the retail industry have some of the tightest operating margins with many barely squeaking by after accounting for rent, utilities and labor — not to mention an ever-growing list of taxes, regulations and fees imposed by local government. This added tax will only lead to more store closures, even as Chicago is already facing a record number of vacancies throughout the city’s central business district, with equally disturbing trends across neighborhoods.

As it stands, multiple grocery stores, convenience stores, pharmacies and restaurants have closed on the South and West sides in recent years. The resulting food deserts leave families with limited options to purchase fresh, affordable food, especially fruits and vegetables — an issue covered extensively by the Sun-Times. The stores that remain find themselves on precarious footing and have repeatedly signaled they cannot absorb higher taxes or expensive regulatory mandates. The mayor’s proposal doesn’t just threaten larger corporations, it threatens the last remaining storefronts in vulnerable communities.

Notably, this added pressure comes at the same time federal funding for the Supplemental Nutrition Assistance Program, or SNAP, is being cut. When these threats from Washington are combined with the mayor’s shortsighted budgetary proposals, it’s clear that even more communities will lose access to fresh and healthy food.

And for what? The mayor says the money raised by the head tax will fund community violence prevention efforts. While violence prevention is certainly a laudable effort, he’s made no mention of hiring and retaining additional police officers, who can deter and investigate the smash-and-grab robberies and organized theft rings that have plagued the city in recent years. As shop owners are forced to lock up merchandise, reduce store hours or close their doors entirely, the city has responded with higher taxes, added regulations and onerous licensing requirements.

In addition to the head tax, this budget proposal would also raise the city’s tax on cloud computing and apply the amusement tax to social media companies. Once again, the mayor claims these taxes will only impact Big Tech, but that isn’t true.

These technologies and services are used by companies of all sizes, including mom-and-pop shops, to advertise to and attract customers. Companies will have to absorb these costs or pass them along to consumers. Either way, Chicagoans lose.

At a time when Gov. JB Pritzker and other state officials are working diligently to reverse the perception that Illinois is bad for business, the leader of our largest city seems determined to do all he can to turn away job creators and scare off economic investment.

Let’s get real. Taxing job creators won’t drive economic growth or improve public safety. What we need are real, immediate solutions — not budget gimmicks intended to pass the blame for failed leadership on businesses making investments in Chicago’s workers, families and neighborhoods.

Rob Karr is president and CEO of the Illinois Retail Merchants Association