Washington state lawmakers are considering a new regional tax that would raise an estimated $121 million a year from some of the Seattle area’s biggest employers, including tech giants Microsoft and Amazon, to fund programs to alleviate homelessness.
The legislation, unveiled Wednesday, is the latest attempt to direct some of the wealth generated by Seattle’s tech boom toward addressing the homelessness crisis.
As proposed, the bill would allow King County to tax payroll at large companies with employees earning more than $150,000 per year. The county, which contains Seattle and Bellevue, estimates the tax would generate $121 million in annual revenue. Funds from the tax would go toward affordable housing, homeless services, behavioral health treatment, and other programs designed to reduce the number of Washingtonians living unsheltered.
The Seattle region is home to some of the wealthiest individuals and most valuable tech companies in the world, yet it has struggled to deal with a growing housing affordability and homelessness crisis. Past attempts to raise revenue by taxing big business have flopped. But state and local lawmakers are hopeful that the new regional tax approach could be the answer.
In a joint statement, King County Executive Dow Constantine and Seattle Mayor Jenny Durkan suggested they have support for the tax from the business community.
“Many of the region’s largest businesses, with deep roots in our community, want to participate in solutions, and want to do so with a comprehensive, countywide approach to homelessness, housing, behavioral health, and public safety,” they said. “We agree, and this bill is a strong step in that direction.”
Amazon declined to comment on the legislation and Microsoft has not yet responded to our questions about the legislation.
The tax would apply to payroll expenses at large companies for employees earning above the $150,000 annual threshold. Salaries below that cap can be deducted from employers’ taxable payroll expenses. The legislation makes an exception for “small businesses” with 50 employees or fewer, where the majority of workers earn less than $150,000 per year.
The tax would not apply to “a comprehensive cancer center,” according to the current draft of the bill. Seattle is home to the Fred Hutchinson Cancer Research Center, a leading institution in the field. Employers facing “extreme financial hardship” can ask the county for a one-year exemption from the tax.
The Seattle business community has been calling for a regional approach to the homelessness crisis for years, which would make opposing the bill tricky. When Seattle was considering a citywide “head tax” on large companies to fund housing and homeless services, industry leaders balked. Amazon and other companies said it didn’t make sense for city officials to tackle an issue that extends beyond Seattle borders.
Seattle’s short-lived head tax left an indelible mark on the debate over housing and income inequality in the city. In 2018, the Seattle City Council passed the tax only to repeal it a few weeks later when faced with what officials called an “unwinnable” fight with the business community. Amid the debate, Amazon threatened to slow its growth in Seattle due to the City Council’s “hostile” attitude toward big business.
The regional approach backed by the tech industry gained traction late last year when Seattle and King County voted to create the Regional Homelessness Authority. The organization will coordinate homeless services throughout the broader Seattle region and if the bill proposed Wednesday passes, the authority will govern the revenue raised by the new tax.
The bill has support from Expedia Group, whose legal chief Bob Dzielak said the proposal “reflects the needs and values of all of our employees in the Seattle region.”
“Our roots are firmly planted in the Greater Seattle area and we are proud to contribute toward the revenue needed to address these issues in the form of a new tax that can make a meaningful impact, creates accountability to drive progress, and quickly gets the needed funding in the hands of our local policy makers in and beyond Seattle as swiftly and responsibly as possible,” he said in a statement.
But not all stakeholders are on board with the approach proposed in Olympia. King County Council member Reagan Dunn issued a statement criticizing the legislation.
“This renewed effort to tax jobs is a political zombie stumbling back from the graveyard of bad ideas,” he said. “This proposal is just Seattle’s failed head tax with a new coat of paint, the only difference is the original disincentivized job creation in Seattle and this version disincentivizes higher wages for the entire County.”