Head tax shows Seattle is “hostile” to business

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Wasting no time since the Seattle City Council approved its business head tax, employers and organizations representing the business community have banded together to raise money and spread awareness to appeal the tax this Fall. Photo: Andre Natta

The Seattle City Council’s unanimous passage of a business head tax sent ripples throughout the business community and economic development organizations who are sounding the alarm that the move threatens the current business climate and will deter potential companies from relocating to Seattle.

On May 14, the council unanimously approved its business head tax plan, which would charge an estimated 585 of Seattle’s largest businesses $275 per full-time worker per year. The tax would begin in January 2019 and continue until Dec. 31, 2023.

The move drew strong criticism from members of the labor and businesses communities, who argued that the council has already spent upwards of $160 million without seeing an improvement in the homelessness issue the tax seeks to address.

In response, several business owners and economic development groups are now saying that city council members have gone too far.

Jon Scholes, President and CEO of the Downtown Seattle Association (DSA), told Lens the association opposed the tax when it was in place in 2008, and it has been speaking out against the tax since it was reintroduced.

“We are familiar with the policy, and the research and experience from other cities that shows that it is a job killer,” he said.

Scholes added that the head tax makes Seattle the only city in the state that would levy a Business and Occupation (B&O) tax along with a tax on jobs.

“It puts us at a disadvantage in the region in particular for attracting jobs and having companies already here to grow further and invest.”

The last six or seven years have been filled with new taxes on companies in Seattle, he continued.

“In many ways, we’ve gone from an unpredictable business climate to a predictable, hostile business environment.

“It’s a troubling message to send to companies in your city and to spread throughout the region, state and country that there is a pretty dysfunctional relationship between city government and business,” Scholes continued. “It will have consequences if it continues for our economy and general tax revenues to the city as well.”

Scholes said businesses of all shapes and sizes across every sector have come together in the past week to fight the tax with their own dollars and resources. Business owners along with members from economic development groups make up the “No Tax on Jobs” coalition, which has raised over $300,000 in one day to place a referendum on the fall ballot to repeal the tax.

“We haven’t seen a response like this in many years in businesses from across the city … voters in Seattle also feel like they are not being listened to by the council on this issue or others,” he added.

To qualify for the ballot, the group needs to gather 17,632 signatures within 29 days of Mayor Jenny Durkan signing off on the tax.

“The reason we’re starting with a referendum is because we don’t have time to let the council shut down growth like this,” Saul Spady, President of Cre8ive Empowerment and the campaign’s secretary, told Crosscut.

Marilyn Strickland, President & CEO of the Seattle Metropolitan Chamber of Commerce (SMCC), said, “The Chamber does not believe that a tax on jobs is the best way to address our regional homelessness crisis, and will continue to advocate for an aligned, accountable approach to help get people off the streets and into permanent, stable housing.”

One reason that SMCC opposes the tax is that the Seattle City Council has “demonstrated an alarming recklessness about spending.

“Our region needs an aligned, accountable approach with … outcome-focused solutions guided by the best practices laid out by Pathways Homes and the Poppe report.”

Pathway Homes offers a resident-focused plan to reduce homelessness by transforming how homeless services are delivered and transitioning from short-term to long-term solutions.

The Poppe report, prepared by Barbara Pope and Associates, recommends the city reduce homelessness by addressing key underlying issues including the lack of affordable housing options and the lack of jobs that offer living wages.

Moving forward, SMCC recommends that city leadership consider two policies that do not require additional revenue: “The first is to pass common sense zoning laws that will allow more housing to be built citywide and do not discourage development. The second is to fix our fragmented regional system for homelessness services.”

 

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