Chicago mayoral candidate studying ‘commuter tax’ for nonresidents who work in the city

One of the front-runners in the Chicago mayoral race is studying a city tax on people who commute to Chicago for work to raise money for the city’s mounting pension debt. https://www.ilnews.org/news/statewide/chicago-mayoral-candidate-studying-commuter-tax-for-nonresidents-who-work/article_aac7e9d4-f418-11e8-b7b6-1bf58106dcb5.html

One of the front-runners in the Chicago mayoral race is studying a city tax on people who commute to Chicago for work to raise money for the city’s mounting pension debt.

Bill Daley, brother and son of former Chicago mayors of the same surname, unveiled an ambitious plan to bring the city’s population back above 3 million people by 2030. Chicago population hasn’t been that high since falling to 2.8 million in the 1990 Census. Daley said the city must address its “broken” pension system.

“We have $42 billion of pension debt at the local level. That works out to $35,000 for every single household in the city,” he said. “We have to find new revenues and everything is on the table. Marijuana, casinos, commuter taxes, real estate transfer taxes and reforms to the system must all be on the table.”

Although commuters don’t live in the city, they benefit from city services, such as police and fire protection. 

The last time a commuter tax idea was floated in Chicago was in 2011, when Inspector General Joe Ferguson estimated that a 1 percent income tax for nonresidents who work in Chicago would bring in $300 million, but could prompt some businesses to move elsewhere. 

“…the most important consideration in deciding whether or not to implement this option is what impact this option would have on the decisions of employers to continue to locate in Chicago and the decisions of potential future employers to relocate here,” he wrote.

Ferguson noted in the report that Philadelphia, Cleveland and Detroit have commuter taxes and that New York City had one until 1999.

The 2009 Census data Ferguson used estimated that 620,000 nonresidents worked in Chicago. Since then, the increase in telecommuting could, depending on the structure of the tax, cause that number to rise substantially. Between 2013 and 2017, Census surveys show the number of people in the Chicago metropolitan region who say they usually telecommute grew 23 percent, to more than 238,000.

Nearby suburbs could benefit if Chicago enacted a commuter tax, one mayor said.

“I think this tax will be a wonderful economic development tool for the City of Naperville,” Naperville Mayor Steve Chirico said. “Instituting a commuter tax to solve the City of Chicago’s pension crisis on the back of suburban workers, will drive companies to move out of Chicago and directly into Naperville.”

Any type of commuter tax would require the permission of the Illinois General Assembly.

The city used to have a payroll tax of $4 per employee per month for any business with more than 50 people when the employee spent more than half their days in the city. That payroll tax was later abolished.

“Today, our population is nearly a million less than our peak 28 years ago. Our schools are emptying out. Crime is festering. Our tax base is not big enough to meet our obligations or provide the services we need,” Daley said. “Taxes keep rising year after year but people aren’t getting much for it. Most of it pays for pensions and debt.”

https://www.ilnews.org/news/statewide/chicago-mayoral-candidate-studying-commuter-tax-for-nonresidents-who-work/article_aac7e9d4-f418-11e8-b7b6-1bf58106dcb5.html

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