Mayor Brandon’s Johnson’s administration on Wednesday distanced itself from a new proposal to raise up to $12 billion in annual revenue — enough to provide property tax and pension relief, free CTA service and child care — by taxing “income” and “wealth,” making big business pay more and dramatically reducing police spending.
The proposal released Wednesday came from the Action Center on Race & the Economy and the People’s Unity Platform.
“We put out a plan that we had to [argue about internally] a hundred different times. It was about $800 million. This is $12 billion. So it has nothing to do with what we’re trying to do,” Johnson’s senior adviser Jason Lee told the Sun-Times.
The final amount was “based on our kind of sober analysis of what might be feasible. … Their employee head tax is proposed to raise $100 million a year. Our head tax was proposed to raise $20 million a year. … They raise $2 billion off the income tax alone. We didn’t have an income tax in our plan. We didn’t think that was the right thing to do. They have a wealth tax. We don’t have a wealth tax.”
Saqib Bhatti, a member of Johnson’s transition team, co-wrote the report and made no apologies for including controversial ideas that demand what he called “political courage” to pursue.
“There’s a history. ... You elect someone like President Obama. Then, the left demobilizes and the business community swoops in and gets what they want. Progressives have learned this lesson over and over again: That it doesn’t serve us well to demobilize after you elect somebody,” Bhatti, co-executive director of ACRE, said Wednesday.
“We’re not gonna win these things without a fight. ... Entrenched interests and the business community are aligned against us in a major way. So the idea that we shouldn’t be ambitious, to me, is just political malpractice,” he said.
The report shocked an already skittish business community, not only for the politically explosive revenue ideas it contains, but also because the groups behind it have ties to the Chicago Teachers Union, where Johnson served as a paid organizer.
Some of the ideas — including a revived employee head tax, a financial transaction tax and higher taxes on high-end home sales and jet fuel — already are among the $800 million in new or increased taxes Johnson has proposed to fund the social programs that form the cornerstone of his anti-violence strategy.
But there are dramatic differences.
Johnson’s proposed financial transaction tax is minuscule compared to the $1 or $2 per trade the group proposes.
Other ideas — such as a 3.5% tax on city income over $100,000 and a 0.4% “wealth tax” on the stock holdings and “personal liquid assets” of the top 10% of Chicago’s most wealthy residents — have been rejected by Johnson. His plan has no digital advertising tax. The new plan has sets it at 13%. Nor does Johnson support a tax on luxury apartment vacancies with a goal of driving down rents.
There are also clear-cut differences on city spending.
The report recommends phasing out all tax increment financing districts, permanently eliminating all 1,700 police vacancies and reducing the Chicago Police Department’s $1.94 billion budget by 9% more, or $174 million.
Johnson initially campaigned on a promise to cut police spending by $150 million — even after promoting 200 more detectives — by reducing the number of police supervisors, canceling the ShotSpotter gun detection contract, closing the Homan Square police facility and abolishing the error-filled gang database.
For months, Johnson pointedly refused to commit to fully funding the police department’s $1.94 billion budget or filling police vacancies.
But after mayoral challenger Paul Vallas hammered Johnson during the campaign for supporting the concept of defunding the police, Johnson promised not to cut “one penny” from the police budget.
“We’re looking at ways we can direct resources within the police budget to things that we think might contribute to more safety. We think we can beef up the detective ranks and the investigative capacity,” Lee said.
“[Interim police Supt. Fred] Waller’s coming in with a lot of great ideas for the summer. We’re gonna put that out. We’ve not talked about eliminating vacancies. And we’ve definitely been clear that we’re not reducing the budget,” Lee said.
Jack Lavin, CEO of the Chicagoland Chamber of Commerce, said Johnson’s post-election conversations with business leaders have convinced Lavin of the new mayor’s flexibility and his more reasoned approach to new taxation.
“His plan does not include a city income tax. He doesn’t plan to cut one penny from the CPD budget. Springfield has no appetite for a financial transaction tax. So we need to wait and see what the mayor’s proposals are before we react, then see how the mayor’s proposals address things like current obligations,” Lavin said. of the $37 billion pension crisis and the $700 million “funding cliff” for mass transit.
“What this group proposes will increase taxes on costs on every Chicagoan and every business. If that causes businesses to leave, if that hurts getting people back to the office to generate economic activity in the Central Business District and neighborhood corridors, if it leads to job loss — then that’s just having the city going backward.”
Bhatti countered that Chicago can no longer be “held hostage” by businesses that “want to be showered with tax breaks” and “threaten to leave when asked to pay” more.
“The greatest tax burden right now is on small businesses and poor families,” he said, “because we don’t make the wealthy and major corporations pay their fair share.”
