Hundreds of business and community leaders are asking Seattle officials to reject a new payroll tax on the city’s highest-paying companies. Business groups sent a pair of letters to Seattle Mayor Jenny Durkan and the City Council expressing concern that the proposed tax would slow economic recovery from the coronavirus crisis.
The letters were organized by The Washington Technology Industry Association and Downtown Seattle Association on behalf of their members, which include Amazon, Microsoft, and other big and small tech companies in the greater Seattle region.
“While it might be true that the city needs new revenues to cover the budget shortfall and additional costs from COVID-19, imposing a punitive tax on job creation will only ensure a slower recovery that further harms the very people you wish to help,” the WTIA’s letter says.
The legislation that the City Council is considering would levy a 1.3% tax on the payrolls of Seattle companies whose annual payroll expenses exceed $7 million. Though payroll data is confidential, the City Council estimates 2% of Seattle businesses would be affected, amounting to about 800.
The proposal pledges to borrow $200 million from existing city funds to provide emergency cash assistance to 100,000 low-income families this year. The assistance would come in the form of four monthly payments of $500, equal to $2,000 per family. The $200 million would be paid back by revenue raised through the payroll tax.
The tax would take effect June 1, 2020. The City Council accelerated the legislation’s timeline to provide immediate relief for families struggling under the COVID-19 crisis. Eventually the funds raised through the tax would go toward affordable public housing. Some money is earmarked for environmental building renovations.
“The nature of the crisis that Seattle will face, that Washington state will face, it’s not simply a product of the pandemic,” said council member Kshama Sawant during a budget hearing Wednesday. “It’s also a product of the deeply regressive nature of this tax system.”
Sawant is co-sponsoring the bill along with council member Tammy Morales. It is part of Sawant’s “Tax Amazon” campaign, a years-long effort to capture some of the wealth generated by the region’s technology industry and use it to mitigate the consequences of growth, particularly the region’s homelessness crisis.
The last time the City Council attempted to implement a new tax on big business, it ended in disaster. The council unanimously passed a “head tax” on the top-grossing companies in the city only to repeal it weeks later in the face of a protracted political fight. The business community fought the legislation, branding it a “tax on jobs” and funding an opposition campaign.
Industry groups are repurposing tactics from that fight in their campaign against the payroll tax. In addition to the letters, the Downtown Seattle Association is collecting signatures for a “No Tax On Jobs” petition, which had more than 6,000 signatures as of Wednesday afternoon.
“The introduction of a new tax on jobs at this period of heightened economic fragility could harm the livelihoods of those of us in the business community that have dedicated our professional lives to creating companies that serve our community and our employees,” the Downtown Seattle Association letter says.
The City Council discussed the mechanics of the tax during Wednesday’s budget hearing and plan to debate the legislation further during a meeting next week.
Editor’s note: A previous version of this story identified Expedia as a member of the WTIA. Expedia was previously a member but is no longer a part of the organization.
Read the full text of the letters below:
No Tax on Jobs by GeekWire on Scribd
WTIA Opposition Letter by GeekWire on Scribd
