Seattle passes payroll tax on larger companies

Jul 9, 2020
Written by wpengine

Washington Retail joined in the opposition from businesses

The Seattle City Council this week passed a payroll tax on larger businesses that’s expected to raise more than $200 million a year for housing, local business assistance and community development.

The 7 to 2 vote came despite opposition from the business community including Washington Retail. In a letter to Council President M. Lorena Gonzalez, Washington Retail President & CEO Renée Sunde expressed WR’s strong opposition to the tax. She stated that the tax could significantly delay the economic recovery of Seattle retailers devastated by closures due to the COVID-19 pandemic. That burden, the letter continues, will be in addition to other costly realities of doing business in Seattle, including slow police response times and organized retail theft.

The “Jump Start Seattle” tax, sponsored by Councilmember Teresa Mosqueda, targets businesses with at least $7 million in annual payroll. The tax would be 0.7% to 2.4% on compensation paid to Seattle employees making at least $150,000 a year. The tax is tiered to various compensation levels and annual payrolls of companies.

Two years ago, in response to public and business community opposition, the Council reversed course and repealed a similar but smaller payroll tax that would have raised $47 million a year. This week, the Council approved the tax after narrowly approving amendments that exempt nonprofit health care companies and sunset the tax after 20 years.

Councilmember Mosqueda and six colleagues – Lorena González, Lisa Herbold, Tammy Morales, Kshama Sawant, Dan Strauss and Andrew Lewis – voted for the tax. Councilmembers Alex Pedersen and Debora Juarez opposed it.

Revenue from the new tax will go towards coronavirus economic relief this year and preserving city services next year. Starting in 2022, the revenue will fund affordable housing, community-led development, local business assistance and Green New Deal investments.

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