If the mayor's 2027 budget version passes, Johnson would have raised annual taxes $1.3 billion, while his school board has raised property taxes another $857 million. These increases fall on residents and businesses regardless on income
With Chicago facing a jarring $882.4 million budget shortfall, Mayor Brandon Johnson doubled down on his “tax the rich” mantra when he rolled out his “Protecting Workers” budget. Last week, the mayor stated his budget will level a playing field that has allowed corporations to make “more money … than they’ve ever made in the history of the world,” including during the “free labor period of slavery.” That is his typical inflammatory rhetoric that detracts from the fact that his budget further burdens Illinois residents while doing little to address the needs of the city.
Chicago’s projected shortfall is smaller than the roughly $1.15 billion gap forecast a year ago. However, an $882.4 million hole is hardly evidence that the city has solved its financial problems. Johnson’s budget has done little to address the spending commitments expanded with the COVID money that has dried up, as he again calls for taxes he can falsely package as an attack on wealthy corporations. After all, the city budget has grown by over 60 percent since the pre-COVID era.
Doubling down on the 2026 budget’s regressive taxes
With the intent to raise $192 million, Johnson again proposes restoring an employer head tax levy, this time at a $25 monthly charge for every staffer at companies with more than 125 full-time employees. One caveat exists: Johnson exempts “companies in officially-designated socioeconomically disadvantaged areas” from the tax. Similarly, Johnson again increases the personal property lease transaction tax, which is already the highest in the nation, from 15 percent to 20 percent, raising $234 million. This, of course, includes a 20 percent tax on cloud computing and software.
The mayor’s claim that he is taxing billionaires and millionaires to “pay their fair share,” as he said at a news conference last week, is deeply misleading. His job-killing head tax charges $25 per employee on large businesses, regardless of whether the businesses are profitable, and his transaction taxes are essentially very high service taxes that have no correlation with one’s ability to pay, while the taxes are passed on to the service user. The city increased the rate from 11 percent to 15 percent last year. It is not tied to income. It is borne by the customers who use the cloud services and software subscriptions.
The mayor’s office projects roughly $416 million in revenue from the tax this year. A major revenue source, this means it is not a tax reserved only for the rich. A neighborhood business that relies on hosted software is not a technology giant. Neither is a freelancer paying for digital tools. When a taxable subscription carries an additional charge, that cost can land on the customer. The fact that a large software company collects or remits a tax does not mean its shareholders absorb the entire burden.
Chicago’s nation-leading software service costs are influencing hiring, investment, and business-location decisions. Johnson cannot dismiss the concern merely by repeating that the tax is aimed at “big tech.” Nevertheless, the City Council has not stood in the way of increasing the cloud tax twice, even as aldermen rejected his property tax increase and head tax. Whatever their disagreements, the mayor and Council both supported a substantial increase in the cost of taxable cloud services.
Despite Johnson’s “tax-the-rich” verbiage, Chicago residents face several new fees and taxes if the mayor’s budget is passed. Johnson hopes to raise taxes on sportsbook betting to 20 percent to raise $37 million and relies on another $18 million from the expansion of the city’s Smart Streets program that automates ticketing for cars illegally parked in bike and bus lanes. Furthermore, he wants to bump taxes on liquor purchased for off-site consumption to raise $13.8 million and create a new 15-cent tax on packages to bring in $9 million.
Ignoring the post-COVID spending problem
Now, a 29-member Council coalition has drawn three lines for the 2027 budget debate: No property-tax increase, no head tax or tax on job growth, and no reliance on money from Springfield that has not been approved. The coalition has also urged the mayor to identify savings and efficiencies within city government. Those are reasonable boundaries, but boundaries alone are not a spending plan. The Council must be able to examine the administration’s assumptions, challenge its priorities, and distinguish recurring savings from another year of temporary fixes.
The problem is that the Council has almost nonexistent analytical capacity for analyzing city spending and programs, making so-called “zero-based budgeting” idle talk. An audit released by the City of Chicago Office of Inspector General (OIG) on April 21, 2026, underscored a basic problem. The City Council Office of Financial Analysis (COFA) provides very limited assistance in budget planning because it is starved of essential city data and lacks critical staffing resources.
The handling of the Ernst & Young report shows why that matters. The city paid a reported $3.2 million for a study identifying between $530 million and approximately $1.4 billion in potential savings and additional revenue. This included between $409 million and $512 million in annual savings. The report was publicly released on October 15, 2025, after the administration issued its proposed 2026 budget.
The report combines revenue options with spending reductions, and some recommendations would take years to implement. They are not a pot of guaranteed cash available to close one year’s deficit, but neither are they an excuse to avoid examining the city’s operations. The Civic Federation has also identified opportunities involving fleet management, real estate, procurement, and public-safety operations. Those are precisely the kinds of structural questions that deserve public hearings, implementation schedules, and measurable results.
In the current budget, the Johnson administration is counting on $50 million to $75 million in savings from a targeted hiring freeze rather than securing savings by implementing the report’s recommended deep structural changes, such as modifying managerial spans of control or restructuring departments. The city needs a much more rigorous accounting of which reforms it adopted, which it rejected, and why. Despite failing to embrace most of the Ernst & Young recommendations, the city entered into a second, nearly $7 million contract extension to expand and implement potential spending cuts.
Caving to politically connected trial lawyers
Equally disturbing is the mayor asking the City Council to support $480 million in borrowing, in part to cover the “global settlements” in the Detective Guevara cases. It’s pushed by trial lawyers as a result of recent legal setbacks and Kim Foxx’s departure, both of which reduced the likelihood of past success in court. Recent losses in court for the trial lawyers included losing a case the City Council opposed settling for $8.25 million and a more significant loss in which lawyers demanded over $40 million for four individuals but were awarded only $700,000.
Former Cook County States Attorney Kim Foxx colluded with the trial lawyers to release murderers and other violent criminals who had been convicted and were serving time by neither contesting lawyers’ efforts to secure their release nor opposing the awarding of certificates of innocence, greasing the skids for multiple hundreds of millions of dollars in civil settlements. Foxx’s Conviction Review Unit helped overturn 248 wrongful-conviction cases that may ultimately cost taxpayers almost $1 billion with City Council rubber-stamping proposed settlements.
More massive subsidies to the CTU-controlled Chicago Public Schools
Meanwhile, Chicago Public Schools remain deeply entangled in the city’s budget choices.
CPS’ proposed FY2027 budget assumes another $285 million in property taxes from the Tax Increment Financing program on top of the mayor-controlled school board’s $300 million increase in school district property taxes. The district will need a total of $435 million in TIF funding to prevent additional mid-year cuts. Last year, total city subsidies exceeded $1.3 billion on top of the schools’ 56 percent share of property taxes.
City subsidies have doubled since before the COVID-19 pandemic, despite the school district receiving a 26 percent increase in state funding, 52 percent more in property tax revenues, and $2.8 billion in one-time COVID monies. The period saw a 44 percent increase in per-pupil funding and over 7,000 full-time staff employees added despite a 14 percent fall in student enrollment. Today, the district spends over $33,000 per pupil and has one full-time employee for every 6.8 students. Despite the massive city subsidies, there is no city scrutiny of school district finances.
For Johnson, it’s more of the same
It’s clear Johnson and his supporters have little appetite for attacking the spending side of the city’s financial crisis, and the City Council has no capacity to do so. This is despite ample examples offered by the Ernst & Young study, as well as other reports, such as those offered by the Civic Federation of Chicago. Neither is there an appetite to reduce subsidies to the school district or even evaluate school district spending. The mayor and his supporters’ inclination is for more spending.
Johnson can continue calling his approach “tax the rich’” however a tax should be judged by its design, incidence, and consequences — not by the mayor’s rhetoric. The fact remains that if Johnson’s budget is approved as introduced he will have raised annual taxes and fees by $1.3 billion from $827 million annually to date, while his school board has already raised property taxes another almost $857.5 million billion annually.
The financial burden imposed by Johnson has overwhelming fallen on city residents, regardless of income, and on city businesses of all sizes regardless of income or profits.
