Chicago tax proposals draw concern over legality, 'economic death
spiral'
[November 19, 2025]
By Jim Talamonti | The Center Square
(The Center Square) – Chicago Mayor Brandon Johnson’s allies have
launched a seven-figure campaign to support his 2026 budget proposal,
but opponents say the mayor’s tax plans will send the city into an
economic death spiral and could bring about costly litigation.
The Chicago City Council met Tuesday but did not vote on a budget after
the council’s finance committee struck down the mayor’s tax-laden
revenue package on Monday.
Chicago Board of Education member Norma Rios Sierra, who joined the
school board in January after she was appointed by the mayor, spoke
during Tuesday’s public comment period.
Rios Sierra threatened layoffs if aldermen did not approve Johnson’s
plan to divert $1 billion in tax-increment financing funds to Chicago
Public Schools.
“If we do not get that TIF surplus, we’re going to be sending a lot of
pink slips for Christmas, and we’re going to put it right back on you,”
Rios Sierra told the council.
Rios Sierra said the Chicago Teachers Union created a calculator so
aldermen could see the impact their votes would have in their own wards.
Also Tuesday, Black Voters Matter Fund announced a seven-figure ad
investment to support Johnson’s spending plan.
BVM promised to “mobilize neighborhoods across Chicago, ensuring that
the voices of Black, Brown, and working-class residents are front and
center in the budget debate.”
Alderman Brendan Reilly referred to the campaign when he told the
finance committee Monday that anti-business tax policies were hurting
the city.
“I can tell you there’s no amount of money that’s going to convince us
that a head tax is good for Chicago,” Reilly said.
The mayor’s budget includes a $21-per-worker monthly tax on businesses
with 100 employees or more.
Reilly said the city’s commercial buildings have lost $400 million worth
of value since their last assessment.
“Because of Cook County’s broken property tax system, when commercial
buildings are found to be less valuable, the rest of that burden falls
on top of homeowners,” Reilly said, adding that he and his colleagues
have been hearing from very frustrated homeowners after they received
their property tax bills last week. “If you want to accelerate our
headfirst dive into an economic death spiral, pass this head tax. That
is effectively what you are doing.”
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While the head tax proposal has drawn the most vocal opposition, an
internet freedom advocate says Chicago’s proposed tax on social
media might actually cost the city more than it brings in.
Johnson’s Social Media Amusement Tax would impose a $0.50 monthly
fee per active user on digital services with over 100,000 users
operating in Chicago.
NetChoice Vice President of Government Relations Amy Bos said the
tax would hit residents right in their wallets.
“Those platforms aren’t just going to eat that cost, right? As we’ve
seen in other business operations, they’re going to pass that on,”
Bos told The Center Square, adding that Chicagoans would see new
fees for services they used to receive for free. “Or they’ll lose
access to certain features, or some platforms might just pull out of
Chicago entirely.”
Bos said the tax would also incite privacy concerns, because
platforms would start tracking where users live in order to figure
out which users are operating in Chicago.
Citing the Permanent Internet Tax Freedom Act of 2016, Bos said
Chicago’s proposal might violate federal law by imposing a
“discriminatory tax” on electronic commerce.
Bos said a U.S. District Court in Maryland struck down that state’s
digital advertising tax.
“We believe the issue is similar here. Chicago would be inviting
similar costly litigation,” Bos said.
Bos said the states of Minnesota and Washington backed off after
proposing taxes on social media.
“They reversed course. We’re hoping Chicago takes the same
approach,” Bos said.
Even if the tax survives legal challenges, Bos said there are a host
of issues with it.
“This tax is going to get stuck in the court, costing the city money
instead of raising it,” Bos concluded.
Johnson’s $16.6 billion spending plan also includes an increased
cloud tax as well as new taxes on sports betting and boat mooring.
The city council’s next meeting is scheduled for Dec. 10. The
council is required by law to approve a budget by Dec. 31. If a
budget is not passed by that date, some government programs might be
interrupted and the city’s bond rating could suffer.
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