Companies won’t just eat the 11% premium to do business in Chicago. They will pack up their laptops and leave—or never show up in the first place.
The domino effect
This is where it gets interesting (and by interesting, I mean painful). When tech companies relocate or shut down, they take high-paying jobs with them. This triggers a cascade of negative economic effects in the community. Those employees cease paying local taxes and reduce their spending at local businesses, leading to decreased revenue for these establishments. As a result, the local businesses also pay less in taxes.
As businesses struggle and people potentially move away, infrastructure suffers as well. Property values begin to decline, which leads to a drop in property tax revenue. This initiates a downward economic spiral that impacts the entire community’s financial health and its capacity to maintain public services. Think schools, police and fire departments, roads, public transport, etc. Believe it or not, other metro areas in the United States offer comparable services and lifestyles without imposing an arbitrary cloud tax burden.
