Councilmember Kshama Sawant unveiled her legislative plan to raise $300 million from Seattle’s largest businesses and use it for affordable housing and to retrofit tens of thousands of homes in the city.
The legislation would levy a 1.7 percent payroll tax on Seattle’s wealthiest corporations — about 3 percent of all businesses in the city. The hundreds of millions of dollars would build 8,000 homes and retrofit roughly 47,000 more.
Sawant also bills the measure as a “public-sector jobs program” that will provide thousands of well-paid jobs.
Notably, supermarkets are exempted from the new payroll tax. When a controversial “head tax” targeting the largest 500 businesses in Seattle was proposed in 2018, grocery stores were at the front of the fight, arguing that their margins were too low to support the tax.
Payroll taxes are controversial because, some economists argue, they are effectively a tax on jobs that discourages employment and higher wages. Although the tax wouldn’t necessarily be shifted onto employees, employers can choose to compensate people differently at the front end to account for the tax.
However, payroll taxes are also deductible under the Tax Cuts and Jobs Act of 2017, the Republican-backed tax plan that handed huge windfalls to large corporations and wealthy people. Those deductions only help a company if they already pay federal taxes, however. Washington’s largest company, Amazon, famously paid no federal taxes in 2018.
The proposal comes while a separate measure — House Bill 2907 — progresses through the state legislature. The bill would allow King County to levy a similar tax on corporations to raise money for homelessness and housing, but would only bring in slightly more than a third as much as Sawant’s proposal.
Businesses claim to back the proposal, but some want a preemption clause that would prevent Seattle from pursuing its own, local tax. Sawant and supporters of the campaign rushed to Olympia after their presentation in Seattle to lobby lawmakers against such a preemption.
That sinking feeling
A judge upheld an initiative on Feb. 12 that would gut transit funding in the state of Washington and could cost Seattle as much as a third of its bus service.
Voter-approved Initiative 976 would cut car tab fees to $30 — a massive reduction in funding that goes to transit in the city, county and state.
Backed by alleged chair thief and now gubernatorial candidate Tim Eyman, I-976 passed by 53 percent of the vote statewide, but was rejected by King County and Seattle voters. The ruling is likely to be appealed.
Ashley Archibald is a Staff Reporter covering local government, policy and equity. Have a story idea? She can be can reached at ashleya (at) realchangenews (dot) org. Follow Ashley on Twitter @AshleyA_RC.
Read the full Feb. 19-26 issue.
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