A Parent of CPS kids

1) I know you guys like to question my expertise, as was the case when I testified to the Finance Committee. Probably a strategic miscalculation… 2) A careful reader would notice I'm deliberate with my data and words. I say “disincentivize” investment and jobs. Not “destroy”. 3) The article you cite fails to prove that a corporate head tax is harmless. There is not enough data to prove anything conclusively. That's because the sample size is too small. Why is that? Because most cities recognize a head tax is ultimately a tax on LABOR and not capital, and that it would undermine their economic competitiveness. Thus, they don't do it! 4) We don't live in the 1900s anymore. The economy has limited geographic friction - especially for a city like ours dominated by service sectors. We compete for investment, employers, talent, etc - and as I wrote in my Tribune piece yesterday, that is a competition we are losing. Do you like any of the following: A) Presiding over the last ranked city amongst the top-25 in the US for real GDP growth over the last 5 years? B) Having an unemployment rate above the national average? C) That our wage growth has trailed US wage growth by nearly 8% since 2020 and lags inflation by 10% over the same period (meaning that real spending power is down substantially)? D) That local job growth has been 1% here since pre-pandemic? Do you really think a head tax will spur the investment we need to turn any of that around? If your goal is more revenue for city services then you need to ultimately expand the tax base! Not punish the existing one. In a competitive economy, do you really think your head tax is conducive to attracting more investment to our city? I am shocked you guys can't connect dots A to B... It would be a huge red flag to development for the remainder of your term. If you just want to stick it to corporations and the rich, please stop trying to crush only Chicago and run for federal office. Companies and wealthier taxpayers can avoid city taxes by moving or choosing not to move into certain cities. You can't escape federal taxes. You are trying to solve for grievances you have about federal policy at the local level - that won't work. You will just cause us more pain. 5) As the WBEZ article even mentions, the closest (but imperfect) comparison to your proposed head tax is a payroll tax, and there the empirical studies do suggest a clear relationship between higher tax rates on labor and lower employment growth. When you raise the per-worker cost of employing someone, employers don’t send you a thank-you note and hire more people. They hire fewer people, slower - especially at the margin. The strongest pattern in the real-world evidence isn’t “mass layoffs tomorrow.” It’s fewer openings, fewer expansions, more substitution (e.g., contractors, outsourcing, automation), and more decisions to place the next role somewhere else. That’s exactly what I mean by “disincentivize.” The WBEZ analysis was looking for net job losses; I am sounding the alarm about workers who will never get hired in the first place. That is the definition of a disincentive. And yes, my friends - we indeed have data showing this dynamic in practice. Several notable studies: - Johnston (2021, AEJ: Economic Policy): Using Florida administrative data, this study found that UI payroll tax hikes significantly reduce hiring and employment levels. The damage comes from hiring freezes, not just layoffs. - Guo (2024, U.S. Census Bureau CES): Found that payroll tax increases reduce year-over-year employment growth by roughly 2.24 percentage points for every one percentage-point increase in the effective tax rate. The negative effects are strongest for young workers and single-location firms.* *And yes, I realize WBEZ cited Professor Guo as questioning "causation" on job loss from the head tax and that "research on Chicago’s previous head tax isn’t conclusive enough to call the policy a job killer" - which, again, I am not doing. I am calling it a job disincentivizer. - Guo & Wallskog (2025, Journal of Public Economics): Even “small” per-worker taxes deter entrepreneurs from becoming employers at all (elasticity of new employers ~ -0.11). It pushes survivors to substitute employees with contract labor to avoid the tax. - Anderson & Meyer (1995, NBER 5201): Show that while payroll taxes may be largely borne by workers at the market-wide level, firms cannot fully pass within-market tax differences onto wages. Instead, employment reallocates away from higher-tax firms. (Today, that means jobs moving from Chicago to other cities.) - Benzarti & Harju (2020, NBER 26640): In Finland, higher payroll taxes didn't just hurt jobs; they crushed investment. They estimate a -13.9% drop in total investment and a -18.0% drop in fixed-asset investment for exposed firms. 6) If you’re so confident that your proposed head tax will have *zero* effect on employment or investment, then stop hiding behind a headline and share your actual analysis. Because right now the posture is basically “Trust us bro.”