When it comes to growth, Chicago needs all the help it can get. Entrepreneurship is foundational to economic growth and social mobility; it should be encouraged at every turn.
Instead, would-be entrepreneurs in the Windy City are met with reams of paperwork, months of wait time, harsh penalties for minor slip-ups and politicians taking a bigger and bigger cut of their paychecks every year.
Here’s what Chicago can do to encourage growth in 2016:
1) Stop being a Scrooge
Being a business-friendly city means much more than photo-ops and ribbon-cutting. Making checklists for permitting and licensing easy to find, swapping huge fines for friendly warnings and reducing time spent at administrative hearings are all major reforms that could save entrepreneurs time and money.
Right now, it takes four times longer to start a professional-services business in Chicago than it does in New York City. Many entrepreneurs can’t afford to wait those extra three weeks while the city gets its act together.
Those who can must recoup those costs on the back end, meaning a lengthy permitting process often serves as a tax on consumers.
Chicago bureaucracy needs to get smart and simplify. That’s a win-win for consumers and business owners.
2) Let home-based businesses thrive
As things stand, Chicago won’t be home to the next Jeff Bezos or Steve Jobs. Why? If you run a business out of your Chicago home, it’s illegal to hire more than one employee – even if they work remotely.
There’s no good reason to kill potential businesses that can’t afford expensive office space from day one. Scrap the ban.
3) Clean up City Council
Being the nation’s “Corruption Capital” is bad for business. Reputation matters. And no small-business owner wants to pay thousands of dollars each year to a government known for graft and greed.
Members of City Council didn’t help that image by running out the clock on their own oversight in November.
To clean house, City Council must put its members under the watchful eye of Inspector General Joe Ferguson. Expect Chicago aldermen to continue making headlines for public corruption in the meantime.
4) Be friendlier to food carts and food trucks
Chicago City Council took a big step forward for low-income entrepreneurs in September, when it lifted the city’s decades-old ban on food carts.
And that’s not all.
In October, city officials went on a food-truck ticketing spree at Wacker Drive and Adams Street, where hundreds of customers line up daily to grab lunch from close to a dozen different food trucks.
Beyond arbitrary enforcement of Chicago’s Municipal Code as it relates to food trucks and parking, food-truck owners must also deal with officials banning them from operating within 200 feet of a restaurant, a requirement enforced via mandatory GPS trackers.
Embracing food carts and food trucks citywide could provide much-needed jobs to thousands of Chicagoans and millions of dollars in sales-tax revenue for cash-strapped Chicago. These entrepreneurs should be welcomed wherever hungry customers demand their products, rather than barred by fearful politicians.
5) Stop slapping high taxes on innovation
In 2015 alone, Chicago imposed a new 9 percent tax on streaming services such as Netflix and Spotify, a new 9 percent tax on cloud computing services such as LexisNexis, and new taxes and fees on rideshare companies such as Uber and Lyft.
The first two taxes appear to be illegal, since they were never brought to a full City Council for a vote. Unelected bureaucrats simply interpreted city ordinances to apply existing taxes to a new, broad range of services.
The new "Uber tax" is the nation’s highest tax on rideshare services, including a 52-cent surcharge on every ride and a $5 charge for every pickup and drop-off at O’Hare and Midway airports, McCormick Place and Navy Pier. The board of the Metropolitan Pier and Exposition Authority – commonly known as McPier – also quietly levied an extra $4 tax on rideshare services for each airport pickup on Nov. 16.
If Mayor Rahm Emanuel truly wants to make Chicago the “digital mecca of the Midwest,” becoming the nation’s leader in dreaming up new ways to tax the Internet and the innovative services it enables is an odd route to take.
6) Dump byzantine sign restrictions
One of the first things a new business owner in Chicago needs to get started is a sign. But dare stencil “Deep-dish pizza” on a window and you must navigate a dizzying city bureaucracy that requires a government-approved “sign erector,” involves at least three different city agencies, costs hundreds of dollars and can take months.
Flaunt the sign-permitting process and you risk fines of up to $15,000 per sign per day. Mere months of unapproved sign usage can easily cost a business $1 million in fines.
Is this the way Chicago should be treating small businesses?
At most, a simple safety inspection should be all that’s required when someone wants to advertise his or her business with a sign. At the very least, the city should establish a one-step online application process for issuing sign permits.
7) Embrace fiscal honesty and tough reforms
Chicago residents already shoulder the largest tax and fee burden in Illinois by far. And a record-setting property-tax hike is set to hit Chicago pocketbooks come 2016. Given the state of city finances, it won’t be enough.
This uncertainty is a poison pill for the entrepreneur trying to make long-term plans for success.
So what does reform look like?
Aggressive consolidation and resource-sharing across departments, massive overhaul of lavish government-worker benefits the city can no longer afford, and stemming the tide of middle-class out-migration by fixing Chicago’s housing problem, to name just a few necessary changes.
In the case of Chicago Public Schools, ensuring long-term financial stability means fighting in Springfield for the right to declare bankruptcy.
The bold action necessary to bring Chicago back from the brink of financial ruin will be neither popular nor painless. But there could be no greater gift to Chicagoans than a city on the rise.
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