The Seattle City Council passed its latest iteration of a payroll tax Monday, a brazen move out of touch with the economic crisis facing the city.
Under the political cover of the COVID-19 emergency, the council voted 7-2 to push through a long-term tax on the city’s richest employers for paying high-income jobs. The council has long shown a willingness to stretch to invent a rationale for an “Amazon tax,” having previously discussed it as a necessity for addressing homelessness and other inequities.
Once again, the council machinated toward a tax while still brainstorming its goal along the way. But setting bad governance aside, taxing employers for providing high-income jobs within city limits could be ruinous for the city’s, and region’s, struggling economy.
The 800 or so businesses subject to the payroll tax — Amazon preeminent among them — now have incentive to take their highest-paying jobs across Lake Washington, or further. While other cities welcome well-paying jobs and court more of them, Seattle is punitive instead. This is the posture the council has pushed the city into, by a veto-proof majority. Mayor Jenny Durkan should veto it anyway and risk an override vote.
Even if the still-murky plans for spending the projected $200 million in annual revenue are filled in with thoughtful precision, that money comes at a hard cost. That revenue is siphoned from businesses, which will manage their balance sheet losses in ways that could hurt Seattle.
One way is moving jobs out of town. The pandemic has shown Amazon and other companies that many office workers can be productive from home long-term. The payroll tax could be an incentive to base those jobs in smaller suburban offices, or out of state, and let workers avoid the city. Such a shift cuts into the customer base that downtown retail and restaurants rely on. Restaurateur Tom Douglas permanently shuttered two once-bustling South Lake Union restaurants the same day the tax was announced. More closures will surely follow. This is how a city loses vibrancy, not to mention small businesses, working-class jobs and sales-tax receipts.
What’s bad for Seattle will radiate regionally if an inability to attract and retain top employers diminishes one of the world’s great cities. The council should now make a sober assessment of what the city might look like without its largest corporate citizen.
The tax must be readdressed. The repercussions will become Seattle’s problems, not Amazon’s. At the least, a veto would give the council opportunity to strengthen the flimsy clause that only suggests the tax might be reconsidered if similar regional or statewide taxes are created.
Councilmember Alex Pedersen, who along with Debora Juarez voted against the tax, rightly characterized the rush job as “taxing first, asking questions later.” Disappointingly, the other council members showed they were willing to overlook thoughtful governance to strike an activist pose. They should reconsider the consequences for the city’s residents and workers.