Lightfoot proposes tax on big law firms like the one where she made millions
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Toni Preckwinkle has portrayed Lori Lightfoot as a “wealthy corporate lawyer who’s defended the elites in this country” only to “recast” herself as a police reformer when the record shows otherwise.
What better way to shake off that image than to tax clout-heavy law firms like Mayer Brown, where Lightfoot made millions while serving as an equity partner?
On Monday, Lightfoot fleshed out her idea of taxing “high-end” legal and accounting services to generate tens of millions of dollars to satisfy a looming $1 billion spike in pension payments.
“How do we generate revenue that isn’t oppressive to low-wage and middle-wage individuals?” Lightfoot said Monday.
“We can’t keep balancing the budget on the backs of low-wage and working-class folks. We’ve got to make sure that people of means absolutely pay their fair share. But we can’t do anything that drives businesses out of the city. So, this has got to be a conversation—not a dictate from on high.”
Lightfoot said she hasn’t worked out all of the details yet and it needs to be done in a “thoughtful” way.
“Looking at the invoices that are sent to clients and tacking on a small tax that would recover from large law firms and big international accounting firms a part of that revenue, I think we could generate a substantial amount — certainly tens of millions, if not more every year,” she said. “That would add a very small tax burden to high-end clients without going back to regressive taxes like ticketing and fines.”
VOTING GUIDE: The Sun-Times Mayoral, Aldermanic Election
In 2011, Rahm Emanuel campaigned on a promise to extend the sales tax umbrella to professional services.
Then-mayoral candidate Gery Chico promptly branded it the “Rahm tax,” prompting Emanuel to drop the idea like the hot potato that it was.
Lightfoot acknowledged the value-added tax she proposes would essentially be a service tax.
Would she set her sights on other services such as hairdressers and health clubs?
“No, no. I’m very limited in the categories. Right now, we’re just looking at law firms and accounting firms. We’d have to have exemptions for smaller businesses that would fall into that category. I’m not talking about taxing the solo practitioner,” she said.
Asked about taxing high-end law and accounting services, Preckwinkle said, “This is not a proposal that I’ve seen, and I can’t respond.”
Whoever wins next week’s mayoral runoff needs to find $270 million immediately and $1.2 billion by 2023 to bankroll the four city employee pension funds.
On top of that, the corporate fund that serves as the city’s operating checkbook has budget gaps of $251.7 million next year and $362.2 million in 2021. And that’s even before you factor in the cost of new contracts and back pay for police officers and firefighters.
Lightfoot has candidly acknowledged the need to have a “conversation about revenue” that doesn’t put any more pressure on the city’s beleaguered and disappearing middle class.
But she has also promised to “build the case” for new revenue with serious cost-cutting.
She has promised not to go back to Chicago property owners who have already endured more than $1.5 billion in tax increases for pensions and schools under Emanuel until the city’s “broken” system for assessing property is fixed.
The value-added tax on high-end legal and accounting services is the fourth local tax increase Lightfoot has suggested during the course of the mayoral campaign.
To provide increased grants to support Chicago artists, she has floated the idea of raising the total tax on a Chicago hotel room that is already the highest in the nation at 17.4 percent.
Lightfoot has also proposed a graduated increase in the city’s real estate transfer tax to help generate as much as $80 million a year in new revenue to ease Chicago’s affordable housing crisis and generate money to re-open mental health clinics.
And she has suggested abolishing the city sticker — along with the city clerk’s office that sells them — and replacing the revenue with dramatically higher fees on ride-hailing vehicles.
Last year, the city sold 1.23 million city stickers and generated $128 million for the repair and maintenance of city streets. Late fees and penalties added another $6.9 million, down from $9.2 million in 2016.
MORE ABOUT THE MAYORAL RUNOFF
• Lightfoot releases Spanish language ad narrated by Chuy Garcia
• Toni Preckwinkle: From high school history teacher to political boss
• Side by side: Lori Lightfoot’s and Toni Preckwinkle’s plans for Chicago