Seattle job tax 2.0: “Punitive tax policy”

Seattle job tax 2.0: “Punitive tax policy”
The Seattle City Council is now considering another job tax, this time in order to provide cash payments to households affected by the COVID-19 response. Photo: freepik.com

Two years after approving and then quickly repealing a $275-per-employee job tax to fund homelessness programs, the Seattle City Council at its April 6 meeting voted to send a revised proposal for another such proposal to its budget committee for further consideration. This time, the 1.3 percent head tax introduced by Councilmembers Tammy Morales and Kshama Sawant would generate an estimated $500 million annually to provide cash to low-income senior and undocumented immigrant households or homeless residents affected by the COVID-19 crisis.

The move – particularly at this point in time – could reignite a political battle that provoked strong opposition from local businesses and led to the formation of the No Tax on Jobs Coalition. The coalition’s then-spokesman John Murray said it’s unclear what the response by the business community will be to the new tax proposal.  However, he added: “I do not think that anybody…believes that at a moment of unprecedented public health and economic crisis, that a punitive tax policy is any sort of a solution or a road to recovery.”

Sawant and Morales argue that the new revenue is needed in part to help compensate for the $100 million revenue shortfall the city anticipates as a result of the COVID-19 response. They also argue that the tax will only affect large employers such as Amazon and companies that have more than $7 million in annual payroll. Exempted are nonprofits, grocery stores and government employers.

However, small businesses have previously noted that they rely on larger companies affected by the job tax for their customer base.

The continual effort by city councilmembers to impose a job tax has prompted some state and county government officials to search for alternatives they believe would be less detrimental to the regional business climate. During this year’s legislative session Rep. Nicole Macri (D-43) sponsored HB 2907, which would have allowed King County to impose a .01-.02 percent job tax and restricted the revenue to certain areas, such as homelessness. The bill failed to clear the House after it advanced to the Rules Committee for review; it garnered support from large Seattle employers such as Expedia while receiving criticism from local elected officials who said they were kept in the dark about the proposal.

A month after the bill was introduced, Sawant and Morales proposed a job tax that would have taken effect in 2021. However, both councilmembers announced on April 1 the tax would now take effect in June; Governor Jay Inslee’s “stay at home” order shutting down nonessential businesses remains in effect until May 4.

Among those opposed to HB 2907 is King County Vice Chair Reagan Dunn, who has now proposed a Coronavirus Recovery Economic (CuRE) Council work group made up of industry and union representatives, as well as state and regionals officials. Dunn told Lens one of group’s objectives will be how to leverage the state’s likely position as one of the first to emerge from the crisis and reopen businesses.

“When this pandemic wave recedes, we’re going to be left with an economy in very serious trouble,” he said. “The question is: ‘How do we move as quickly as possible to pull all the right levers to get us back to where we were 6-7 weeks ago?’”

However, Dunn warned that “the Seattle City Council seriously risks killing the goose that lays the golden egg here at a time when we’re as vulnerable as potentially ever in a century. (Boeing) shares are down 50 percent. They’re not even producing planes. When you start doing those things (new taxes) without an economic forecast, it becomes a problem.”

There are no meetings yet scheduled for Seattle’s Select Budget Committee. Dunn’s proposal will be considered by the county council at its April 14 meeting.

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