The Seattle Metropolitan Chamber of Commerce has sued the city over its approval of a payroll tax on highly-paid executives.
The Superior Court action asserts that the action is unconstitutional because it “taxes the right to earn a living.” The city council hopes to use the revenue immediately to close a budget shortfall caused in part by the COVID-19 pandemic. In later years, the city hopes to use tax proceeds for affordable housing, community-led development, local business assistance and Green New Deal investments.
The tax applies against larger companies with at least $7 million in annual payroll including Seattle-based Amazon. It applies a range of taxes from 0.7% to 2.4% on salaries and wages spent on Seattle employees who make at least $150,000 a year.
Mayor Jenny Durkan, who warned of legal challenges, decided against signing the ordinance that the council passed earlier this year. It took effect without requiring the mayor’s signature. Durkan suggested the tax would discourage companies from considering locating or remaining in Seattle.
The chamber’s complaint says the ordinance lacks spending accountability and was hurriedly approved during one of Seattle’s biggest-ever economic recessions that has claimed more than 200 stores and businesses and countless layoffs.
It continues in part: “Rather than build a long-term strategy to move the City forward, the Council is producing backwards policies like this tax that could delay or derail Seattle’s development into a city of the future.”