The Seattle City Council’s call for a tax on jobs is a hollow gesture that will hurt, not help, the working class. Mayor Jenny Durkan should veto this misguided scheme if it’s approved by the council.
Seattle’s City Council will harm the city, its business climate and workers across the board if it starts taxing large companies for every person they hire.
Mayor Jenny Durkan should be prepared to veto this measure because it will reduce jobs, opportunity and Seattle’s ability to attract new employers.
The council is proposing a per-hour tax that works out to $500 per full-time employee. It would apply to about 600 employers — any with revenues over $20 million — and generate $75 million yearly. In 2021, it would shift from an hourly tax to a payroll tax, collecting roughly the same from the same employers.
This is the latest effort by Seattle politicians to make a symbolic “eat the rich” gesture, even though they already tax business heavily.
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Instead of nurturing the success of local companies that create vitality and prosperity, the council is in effect blaming them for its inability to adequately budget and respond to pressing needs.
Calling this progressive is hollow grandstanding. To actually shift the tax burden, the council would need to simultaneously cut regressive sales and property taxes, but it’s not.
Councilmembers recently voted to tax soda because they expect the tax to reduce spending on soda.
So, what do they expect if they tax jobs?
Those who vote for such a tax will hurt businesses small and large. They will reduce job opportunities for youth, immigrants and laborers — who depend on economic growth that this tax will dampen.
If Seattle was truly in a bind and companies weren’t contributing, per-employee taxes might be an option.
Redmond did this when it was strapped by sales-tax exemptions for its dominant employer, Microsoft. It still doesn’t tax companies’ revenues, as Seattle’s business-and-occupation tax does.
Seattle doesn’t need to layer on more taxes. It’s flush with a budget that grew 17.4 percent since 2015.
More than half of Seattle’s tax revenue comes from businesses, not counting money that flows through paychecks to residents and then to City Hall. Business groups supported levies for urgent needs such as transit and housing, but adamantly oppose this jobs tax.
The council released its tax proposal Friday, just ahead of a public hearing at 5:30 p.m. Monday at City Hall. Final approval is expected May 14.
This is not a moral necessity for the homeless crisis.
Nearly $200 million a year is spent in Seattle and King County on homeless and housing services. The city and county have also considered a regional, and regressive, property tax to generate another $68 million yearly.
That’s for a homeless population that last year, in a point-in-time count, numbered 5,485 unsheltered people and 6,158 in shelters, transitional housing or safe havens.
City and county consultants have said weak policies and management, not funding, are the larger problem.
Meanwhile, companies such as Starbucks and Amazon stepped up. Millions of dollars were raised and Amazon is building a family shelter inside an office tower, a commitment worth more than $10 million. As thanks, the council says they aren’t paying their share.
No wonder Amazon is building a second headquarters elsewhere. Its leaders are tired of being a punching bag for self-aggrandizing ideologues, especially after investing $30 billion in Seattle.
Amazon created 50,000 jobs in Seattle and plans to add 10,000 more. Those new jobs could easily go to another site such as Vancouver, B.C., Portland or wherever the second headquarters lands.
Durkan tried to split the baby. She urged the council to exempt small businesses and other favored constituencies. But that fails to address the tax’s overall negative effect on Seattle’s tarnished business climate and companies of all sizes.
“Even if small business gets a carve-out, it still trickles down on us,” said Taylor Hoang, who closed two of her Pho Cyclo restaurants in Seattle after struggles with rising business costs, traffic and parking.
City leaders are being pressed to impose this tax by special-interests wanting more. They won’t hear from the far larger constituency that will get less — carpenters and ironworkers, security guards and cleaners, waiters and bartenders, programmers and salespeople. Those people simply won’t get jobs and a chance to build lives in Seattle because their jobs went somewhere else.
Council members should reject this flawed proposal and find legitimate ways to reduce residents’ tax burden, starting with fiscal discipline.
If they proceed, Durkan must veto the tax and use her political and negotiating skills to ensure the veto holds.
Information in this article, originally published April 20, 2018, was corrected April 23, 2018. A previous version of this story incorrectly stated that Seattle and King County had considered raising the property tax to pay for homeless services. They had discussed raising the sales tax.