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Mayor Daley offers tax break to Chicago businesses

December 9, 2009 3:26:48 PM PST
Mayor Daley is announcing a new incentive to create jobs in Chicago. He is proposing to waive the employee "head tax" on businesses, hoping that will inspire companies in the city to hire more employees. Right now, Chicago businesses pay $4 per employee each month. The mayor's proposal comes as the Obama administration also seeks to jump start the job market.

President Obama says he is hoping for bipartisan support for his plan to use leftover financial bailout money to help small businesses and create jobs. The president met with Republican and Democratic congressional leaders on the issue Wednesday. Although Republican leaders disagree, Obama says unspent money from the TARP program can both reduce the deficit and create jobs.

"I'm confident we can put our economic troubles behind us. But it's going to require some work and cooperation and a seriousness of purpose here in Washington," Obama said.

Mayor Daley says temporarily lifting Chicago's expense tax, or the so-called head tax, could be the break area businesses need to hire more workers.

Mayor Daley hopes congress will follow through with some of President Obama's suggestions. And the mayor plans to lobby the state for a corporate tax credit for creating jobs. For now, the mayor says the city will do its part to get Chicagoans back to work.

A meeting of city business leaders produced some interesting ideas about how to create jobs -- one of those ideas the mayor hopes to put into action. Wednesday, Mayor Daley announced a proposal to temporarily lift a city tax.

"It diverts funds that businesses can otherwise use to pay wages or make other investments. In the current economy, we want to remove this perceived barrier to job creation," said Mayor Daley.

The employer's expense tax is commonly known as the head tax. It applies to businesses with 50 or more employees. The employer pays $4 per employee per month. Mayor Daley wants to lift the tax for employees hired during 2010 and 2011.

"Incentives such as this one we are proposing today, when combined with other incentives, initiatives, can lessen the impact of the recession on our city residents and also on the employer," said the mayor.

Some local business owners who attended the meeting with the mayor encourage efforts to help them hire more employees and ultimately help their bottom line.

"As a business owner, especially in a recession, you look at every single item that you're paying for, and I think the mayor's initiative is a good one," said Peter Hanig, Hanig's Footwear.

"We have to watch every dollar that we spend. We're constantly looking at that, trying to build our revenues, and then hire more people so we can grow our business," said Kim Oster-Holstein, Kim and Scott's Gourmet Pretzels.

Kim and Scott's Gourmet Pretzels employees nearly 100 people to hand craft their pretzels.

"They're made with love and they're hand twisted. You can tell," said Scott Holstein, Kim & Scott's Gourmet Pretzels.

The West Side company is growing. Its owners are at a point where they have to decide if they can afford keeping all these pretzels handmade by Chicagoans or go with machines. The company's owners hope the city lifts the head tax.

"Part of what goes into the decision about whether we automate or use people is the head tax. It's basically a tax on having people to twist pretzels," said Scott Holstein.

The mayor will take his proposal to City Council on December 16. Economists expect unemployment to continue to be high through 2010.

It will likely be a long tough road to get significant job creation. But this is a step toward helping small and medium-sized businesses, and that's where we can expect to see much of the job creation.


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