Chicago’s head tax proposal fails again: What happens next?
TOI GLOBAL DESK | TOI GLOBAL | Nov 18, 2025, 23:48 IST
Mayor Brandon Johnson
( Image credit : AP )
Chicago’s renewed effort to bring back a corporate head tax failed again after the City Council’s Finance Committee rejected Mayor Brandon Johnson’s plan. The tax was expected to raise about one hundred million dollars to help close a major deficit. With the proposal blocked, Chicago must find new savings. Aldermen say union negotiations and cost cutting are now unavoidable as the city races to balance its budget.
Chicago’s plan to bring back a corporate head tax has failed for the second year in a row and City Hall is now under pressure to find a new way to close a major budget gap.
The Chicago Tribune reported that the City Council’s Finance Committee voted 25 - 10 on Monday to reject Mayor Brandon Johnson’s revenue plan. This included his proposal to tax companies based on how many employees they have in the city.
After the vote, the mayor still told reporters that the tax “is in the budget” and “will stay in this budget.” That quote was taken from the mayor’s comments to reporters at City Hall on Monday.
London based consulting firm Ernst & Young (EY) was hired by the city earlier this year to look at ways to cut costs. According to the reports, the Johnson administration accepted some of EY’s smaller recommendations but left out cost saving ideas that would have required concessions from Chicago’s union workforce.
Chicago is facing a projected $1.2 billion deficit for 2026. The mayor believed the head tax would bring in around $100 million a year, though there is no confirmation it would have raised that much.
Because the tax is now officially blocked, that revenue hole needs to be filled quickly. Several aldermen said that the cost cutting must be back on the table.
Los Angeles avoided hundreds of layoffs after unions agreed to cost-saving measures. San Francisco cut around 40 jobs and removed more than 1,000 open positions. Denver imposed unpaid furlough days, though police and fire workers were exempt.
These examples show that labor groups in other cities have taken steps to help balance budgets during hard financial years.
The council’s vote means the mayor must present a balanced budget without the head tax. Several aldermen said that they expect union talks to resume soon, since no other option will close the funding gap in time.
Ald. Pat Dowell, who chairs the Finance Committee, is already being mentioned in political circles as someone who could help lead negotiations with unions.
Chicago leaders need to agree on a plan quickly. The city’s financial deadline is approaching, businesses strongly oppose the head tax and unions want to avoid layoffs or cuts to benefits.
For now, City Hall is stuck between two major groups and the next few weeks will show whether the mayor can find enough common ground to pass a final budget.
The Chicago Tribune reported that the City Council’s Finance Committee voted 25 - 10 on Monday to reject Mayor Brandon Johnson’s revenue plan. This included his proposal to tax companies based on how many employees they have in the city.
After the vote, the mayor still told reporters that the tax “is in the budget” and “will stay in this budget.” That quote was taken from the mayor’s comments to reporters at City Hall on Monday.
London based consulting firm Ernst & Young (EY) was hired by the city earlier this year to look at ways to cut costs. According to the reports, the Johnson administration accepted some of EY’s smaller recommendations but left out cost saving ideas that would have required concessions from Chicago’s union workforce.
Chicago is facing a projected $1.2 billion deficit for 2026. The mayor believed the head tax would bring in around $100 million a year, though there is no confirmation it would have raised that much.
Because the tax is now officially blocked, that revenue hole needs to be filled quickly. Several aldermen said that the cost cutting must be back on the table.
Los Angeles avoided hundreds of layoffs after unions agreed to cost-saving measures. San Francisco cut around 40 jobs and removed more than 1,000 open positions. Denver imposed unpaid furlough days, though police and fire workers were exempt.
These examples show that labor groups in other cities have taken steps to help balance budgets during hard financial years.
The council’s vote means the mayor must present a balanced budget without the head tax. Several aldermen said that they expect union talks to resume soon, since no other option will close the funding gap in time.
Ald. Pat Dowell, who chairs the Finance Committee, is already being mentioned in political circles as someone who could help lead negotiations with unions.
Chicago leaders need to agree on a plan quickly. The city’s financial deadline is approaching, businesses strongly oppose the head tax and unions want to avoid layoffs or cuts to benefits.
For now, City Hall is stuck between two major groups and the next few weeks will show whether the mayor can find enough common ground to pass a final budget.