Let's Tax the Golden Goose

The tax that won’t die — and other revenue plans — surface in city election
Seeking influence in ward races is a group, United Working Families, that has argued for tax hikes that target the rich but could chase businesses and suburbanites from the city.
By David Roeder




Demonstrators protest outside the Chicago Board of Trade Building in 2015, calling for a tax on stock and futures trading.

Lobbyists, journalists, consultants and others with a pronounced interest in what the local electorate will decide usually say the same thing: Politics in Chicago is a sport.

It’s an article of faith, a claim for a Chicago distinction, like parking dibs. But if it’s true, then politics is a sport drawing less participation at a basic level. In the 2019 mayoral election, only about one-third of registered voters cast ballots. It was a surprisingly low figure involving a race for a wide-open seat.

Falling participation creates a power vacuum some interest groups hope to fill by providing candidates with money and foot soldiers.

One such organization on the hustings is United Working Families, a neighborhood coalition that draws heavy support from the Chicago Teachers Union and the Service Employees International Union. After enjoying some success in last year’s election, the group would like greater influence. It has endorsed Cook County Commissioner Brandon Johnson for mayor and candidates in 18 of the 50 ward races, including six incumbents.

UWF Executive Director Emma Tai said two of its aligned groups hope to spend $500,000 collectively on the election. It’s not a huge amount, but she said the group’s efforts are “more people-powered than money-powered.”

The organization has a mission of high-mindedness — quality education and jobs, affordable housing, etc. — while advocating a blitz of tax increases it has said will target corporations and the rich. It’s a long list the group said would raise $4.5 billion. Everyday Chicagoans might look at it and view themselves as collateral damage.

There’s a city income tax on salaries greater than $100,000 a year which, at last check, would include a lot of public schoolteachers. There’s a sharp increase in the hotel tax, where Chicago already compares unfavorably with its competition for conventions. Goodbye, union jobs at hotels and McCormick Place. There’s a tax on commercial leases and a $35-a-month corporate head tax, poison for a downtown needing more people to occupy offices and visit its restaurants.

These things were in a platform the group issued in 2019 when it broke with Mayor Lori Lightfoot over her first budget. Lightfoot said the demands were “untethered” from fiscal reality. But some points are compelling and could draw broad support. They include reform of tax increment financing and a higher tax on the sale of $1 million-plus homes.

The biggest-ticket item, though, was a financial transaction tax, otherwise known as a La Salle Street tax on trading here. This has been a hobby horse of the left for decades. It is now meaningless, but it keeps coming up when politicians reach for new revenue.

The old days of trading financial contracts at a physical place, a trading floor, are gone. The business occurs over electronic systems and Chicago-based exchanges, CME Group and Cboe Global Markets, have servers outside of city limits. They can avoid the tax almost literally by flipping a switch, which is what their customers will demand. The CTU regularly calls for a transaction tax. The teachers need to do their homework.

In 2016, the idea of a statewide transaction tax gurgled up in the tar pit of Springfield. It forced CME Chairman Terry Duffy to explain the facts of life at a legislative hearing. Duffy said CME leases its Aurora data center from a company with a national real estate footprint.

“Our lease explicitly provides that we can use any of their data centers, so if we need to leave Illinois because of any irrational decisions coming out of the state legislature that could affect our business, we have 28 data centers to choose from,” Duffy said. Avoiding a Chicago-only tax would be even easier.

Yet, the transaction tax surfaced in the platform of Johnson, the CTU’s chosen one for mayor. Johnson embraced an increased tax on high-end home sales and he wants to reinstate the head tax at $4 a month. A spokesman said Friday Johnson does not support a city income tax and has retracted support for a “Metra tax” on suburbanites who commute to the city after considering feedback.

Progressives could be a stronger bloc in the new City Council. So a business-funded political action committee, called Get Stuff Done, is backing candidates it deems to have a more centrist outlook.

Ronald Holmes, a spokesman for the PAC, said its goal is to raise $1.4 million. Supporters include private equity investor Michael Sacks, the billionaire Crown family and the Chicago Laborers’ District Council. Sacks is a donor to the Sun-Times.

Early voting has started, so it behooves Chicagoans to look at the backgrounds, positions and funding sources of the candidates. The Sun-Times has a voter guide that will help.

If you think doing the research is too taxing, just wait.

Next will be a special tax on businesses that decide to move out of Chicago.