Will Chicago Pursue a Commuter Tax?

Chicago Mayoral candidate Bill Daley lit up the suburbs last month with a single stray phrase in his revenue plan – “commuter tax.” He didn’t say he’d pursue a commuter tax. He didn’t describe any plans for it. He merely mentioned it without ruling it out, which is enough get his name in heavy circulation. A commuter tax may be bad policy, but it’s good politics.

Obviously, suburban residents are hostile to the notion of paying taxes to support the City of Chicago, though perhaps they shouldn’t be. Chicago is the engine of the region and a revenue driver for most area businesses. Even businesses with no direct tie to the city benefit from its infrastructure, capital and customer base. Without a healthy Chicago, Naperville would be just as vibrant and prosperous as Quincy or Dixon.

Suburban leaders and other mayoral candidates have rolled out the usual complaint that raising taxes will kill jobs. That argument is as hollow as most complaints about taxes. If high taxes really drove away business, then San Francisco wouldn’t be the center of wealth creation for the world. Taxes are like any other expense, they are as high or low as the value they yield.

Other cities have mostly abandoned commuter taxes because they are clumsy and easy to evade. They simply fail to produce promised revenues while adding another layer of compliance burdens. Businesses may not care much about taxes, but they care enormously about complexity and administrative overhead. Commuter taxes produce more of the latter while delivering too little revenue.

Chicago isn’t going to implement a commuter tax. Raising the subject is good electoral politics by Daley and nothing more. However, the discussion it stirs could be healthy as the region moves on to tackle transit and infrastructure challenges. There is no suburb without an “urb.” If suburban voters think they can shirk Chicago’s challenges by moving just a few miles away, they are making a serious miscalculation.

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