October Surprise: Emanuel cuts "Head Tax" in half

By Chuck Sudo in News on Oct 5, 2011 6:20PM

Chuck Sudo/Chicagoist

Mayor Rahm Emanuel gave local business owners an early Christmas present today by slicing the so-called "head tax" in half.

The tax, a monthly tax charged to companies with 50 or more employees, was a campaign platform of Emanuel's during his mayoral run. Currently companies are charged $4 a month per employee a company has over the 50-person ceiling. Emanuel originally promised a $1 a year rollback of the tax before eventually eliminating it. The halving of the head tax was also a contingency of yesterday's announcement that Ford would add up to 2,000 new jobs at its South side plant.

In a press release, the mayor called the head tax a "job killer."

"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," Emanuel said. "Today we took a critical step in helping attract businesses to our city and enabling those businesses to create more jobs for Chicagoans.”

The move will deprive city government of $20 million in revenue but, with unemployment in Chicago hovering at around 10 percent, Emanuel hopes the reduction in the tax will spur job creation.

The head tax was a remnant of the administration of the late Richard J. Daley, who implemented it 37 years ago as a means of holding off a city income tax. Former Mayor Richard M. Daley cut $1 off the tax in 1994, but businesses have cried foul of the tax for most of its existence. Emanuel promised to phase out the tax completely by June 2014.