Aldermen: Emanuel talks tax relief while going after small businesses

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Updated: November 2, 2011 1:06PM

Mayor Rahm Emanuel’s administration was accused Tuesday of giving “head-tax” relief with one hand and taking it away with the other — by aggressively pursuing affiliated businesses with common ownership for back taxes dating back years.

The City Council’s Finance Committee approved the mayor’s plan to cut the $4-a-month head tax in half on July 1 and lift the remaining $2 on July 1, 2014.

But, debate on eliminating that “job killer” tax was overshadowed by complaints about the “unitary business practice.”

That’s the policy of grouping restaurants, bars and other “like businesses with common ownership” together for the purpose of counting their employees and seeing who is eligible to pay the head tax.

Since most restaurants and bars have fewer than 50 employees, they have not been required to pay the head tax, but that’s apparently about to change.

Two influential aldermen — Budget Committee Vice-Chair Brendan Reilly (42nd) and Tom Tunney (44th), chairman of the Committee on Economic, Capital and Technology Development — complained that, in his desperate search for revenue, Emanuel is attempting to enforce tax obligations dating back five years.

“These folks are getting blind-sided. I’ve got business owners — folks who employ a lot of Chicagoans and pay a ton of taxes — talking about closing shop,” Reilly said, arguing that the policy “runs counter” to the head-tax relief.

“This isn’t simply a routine audit. You’re stretching it to nearly every tax these businesses pay. And in some cases, businesses are being told, ‘If you don’t settle up on the unitary issue, we will . . . go [through] all the rest of your records and put you through a proctology exam.”

Tunney warned City Comptroller Amer Ahmad that, if the unitary business practice doesn’t stop, the City Council would “end it legislatively.”

“It is not right and it’s not fair and it’s not job-creating, which is what this mayor ran on a platform of,” Tunney said, in a rare public rebuke of Emanuel.

“How can you justify going after businesses for adding people to their payroll? . . . We need to know who you’re going after, how much money you’re going after and what you’re doing [by] threatening the livelihood of these businesses by going back four or five years. That is not justifiable under this administration or under any administration — especially with an unemployment rate in Chicago that’s probably over 10 percent. This is ludicrous.”

With a $635.7 million shortfall, Ahmad said it’s imperative to make a “big deal about collections” at all levels. That includes businesses, individual taxpayers and city employees with overdue water bills and parking tickets.

“Collections [are] never fun, but it is an important part of our efforts for 2012 and beyond,” he said.

But, he added, “We want to do it respectfully and we want to do it in a way that doesn’t shut down businesses or make people feel bad.”

The head-tax relief will deprive the city of roughly $23 million in annual revenue.

Former Mayor Richard J. Daley proposed the head tax in 1974 to ward off a city income tax. It has been a giant thorn in the side of business every since.

Emanuel campaigned on a promise to phase out the head tax over four years. But to send a signal to the business community at a time when he’s working hard to create private sector jobs, the mayor decided to cut the head tax in half on July 1 and move up the timetable to lift the tax altogether by six months.