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Emanuel Moves To Phase Out ‘Job Killer’ Head Tax

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Chicago City Hall (Credit: CBS)

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CHICAGO (CBS) – Mayor Rahm Emanuel said Wednesday that he’s going one step further in keeping his campaign promise to get rid of the $4-a-month employee head tax that is despised by Chicago businesses.

As WBBM Political Editor Craig Dellimore reports, Emanuel has proposed an ordinance to cut the head tax in half next year and then later phase it out completely. He had campaigned on a promise to phase out the controversial tax over his four-year term by cutting it by $1 a year.

But his proposal would cut the head tax in half by next year and eliminate it altogether by 2014. Emanuel said the phase out was part of an agreement with Ford to secure 1,100 new jobs at their South Side plant.

“I don’t think there’s one of you that don’t know an employer who has spoken in very colorful language about the employee head tax,” Emanuel said. “This has been a significant piece in our ability to win those jobs at that Ford plant and add a third shift in the Ford plant in the city of Chicago.”

The move would strip the city of approximately $20 million in annual revenue, according to the mayor’s office. But it will also relieve a burden that business owners despised and said has kept many companies from moving to or opening in Chicago.

LISTEN: WBBM Newsradio Political Editor Craig Dellimore reports

Businesses with at least 50 employees are now required to pay $4 a month for every worker who earns at least $900 per quarter.

Ald. Brendan Reilly (42nd), who represents the many businesses located downtown, said you can’t attract big businesses to the city by charging them a tax for every employee on the payroll.

“I’ll tell you, the head tax is a job killer. It is a sign on the highway saying ‘Please, please do not invest in the city of Chicago,’” Reilly said.

Ald. Tom Tunney (44th), who owns Ann Sathers restaurants, praised the mayor’s proposal.

“I have been working on this – as you know – for many, many years, probably as early as the early 90s, when it was originally proposed that we were going to phase this tax out in 1995,” Tunney said.

City Council passage is all but certain with Emanuel behind the plan. His predecessor, Mayor Richard M. Daley, who two years ago had rejected a plan by Tunney to phase out the head.

Daley cut the head tax by a dollar in 1994 and excused businesses with fewer than 50 employees from the head tax, saying he would later phase out the head tax, but the phase out never happened.

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