Big businesses like Amazon support tax for King County, but questions about Seattle, suburbs remain

Amazon and several other large Seattle-area corporations, including Alaska Airlines, Costco, Expedia, Microsoft and Starbucks, expressed support Tuesday for the concept behind a Washington House bill that would allow King County to enact a big-business tax. Meanwhile, numerous labor unions and nonprofit organizations outright backed the measure, as did Redfin.

Introduced last week, House Bill 2907 would allow King County to impose a payroll tax of 0.1% to 0.2% on compensation paid by businesses to employees making at least $150,000 a year, with exemptions for small businesses, government entities and some other companies. The money would be used to fund affordable housing, homeless services, behavioral health services and related public-safety services, and much of it would flow through the regional homelessness authority that the county, Seattle and other cities are creating.

High-stakes negotiations over the bill will continue this week, with a House Finance Committee vote scheduled for this Friday and some debates unresolved. Some suburban mayors say they were blindsided by the proposal and some business leaders want the measure tweaked to block Seattle from passing its own, larger big-business tax, as certain City Council members have vowed.

The Downtown Seattle Association has listed a ban on cities enacting similar taxes as a condition for backing House Bill 2907, the Washington Hospitality Association adopted that stance Tuesday during the bill’s first hearing in Olympia and a statement from Amazon and other heavy hitters hinted at the same objective: Removing Seattle’s council from the equation. Previously, only Expedia had thrown its weight behind the bill.

The homelessness crisis and related concerns “directly impact individuals and families who live and work in communities across our region,” the companies, also including Puget Sound Energy, Zillow and Weyerhaeuser, said in a statement sent to the bill’s sponsor, Rep. Nicole Macri, D-Seattle, and other lawmakers.

“That’s why we’re joining together to urge a coordinated, regional approach rather than a piecemeal solution,” the companies said, expressing support for “a new business tax imposed at a reasonable level with accountability for results in homelessness and affordable housing.

“We are encouraged by the effort in Olympia … but we believe it is critical that this legislation include a regional approach to address a regional issue.”

The possibility of House Bill 2907 taking away Seattle’s ability to enact its own tax has drawn condemnation from some Seattle City Council members.

“I’m a hard pass on preemption,” Councilmember Tammy Morales said during a briefing Monday, joining councilmembers Teresa Mosqueda and Kshama Sawant in that view. “It’s really important that we as a city have every tool available to us.”

Macri has signaled an open mind on the issue, while Rep. Gael Tarleton, D-Seattle, who chairs the House Finance Committee, is undecided on how the bill should deal with cities.”I have not made up my mind about preemption,” she said in an interview Tuesday.

Politicians, business leaders and activists have been debating what to do about a big-business tax since November, when Sawant won re-election alongside some other progressive candidates. Seattle passed a per-employee “head tax” on big businesses in 2018 but almost immediately repealed it under pressure from critics, including Amazon.

This year, Sawant has launched a new “Tax Amazon” campaign, calling for a Seattle tax to raise as much as $500 million per year and citing a recent report by McKinsey & Company that recommended an additional $450 million to $1 billion in annual spending to solve homelessness here. At the same time, Seattle Mayor Jenny Durkan has worked behind the scenes for the countywide measure, which she has said could raise up to $121 million per year.

In the coming days, lawmakers are likely to discuss tweaking the tax rate and exemptions in House Bill 2907. For the moment, however, the bill has broad backing from the labor movement and social-service organizations.

“We need a regional approach” to combat homelessness, the Washington State Labor Council wrote in a letter Tuesday, joined by unions that represent home healthcare workers, hospital workers, public school teachers, truck drivers, janitors, firefighters, supermarket workers and others. “We need the Legislature to allow counties like King County to address the growing crisis.”

“We urge the Legislature’s support for HB 2907, authorizing a progressive funding source to address homelessness,” dozens of organizations, including Catholic Community Services of Western Washington, Downtown Emergency Service Center, Asian Counseling and Referral Service, El Centro de la Raza, the Seattle Housing Authority and the King County Housing Authority, wrote in a separate letter.

Redfin joined the chorus Tuesday, estimating the new county tax would cost the real-estate company $50,000 to $100,000 per year. The company opposed Seattle’s 2018 head tax.

“Opposing one tax as the wrong tax obligates us to say what tax would be right,” Chief Executive Officer Glenn Kelman said in a statement.

In discussions before Macri introduced House Bill 2907, some business leaders asked that a clause prohibiting cities from enacting similar taxes be included and that language was at one time included in a draft bill, according to a business leader who took part in the discussions but wasn’t cleared to speak publicly about them. “Double jeopardy is a concern,” Downtown Seattle Association president Jon Scholes said in an interview.

With the Legislature’s short session advancing quickly, business leaders may have to decide whether to compromise on the Seattle question or risk stalling the bill. Leaving Olympia with nothing could open the door wider to Sawant’s campaign. Durkan has declined to take a position on the preemption issue, while Sawant has called it a big-business ploy.

“Today we’ve seen a robust coalition of stakeholders … coming together around a shared solution,” Durkan said in a statement. “Without a doubt, the bill will continue to undergo discussion and input.”

Negotiations could result in a partial preemption of cities’ ability to pass their own big-business taxes, and non-Seattle politicians also are now in the mix. Redmond and Kirkland already have head taxes, but those could be grandfathered in. Auburn Mayor Nancy Backus and Kent Mayor Dana Ralph told the House Finance Committee they were excluded from the discussions that led to House Bill 2907.

“None of us were at the table,” Ralph said.

“Now we’re left to scramble to determine what effects this will have on our community,” Backus said.

The suburban mayors neither supported nor opposed the bill. But they said they want to make sure a new tax wouldn’t hurt the economies in their cities.

The Association of Washington Business opposed the bill Tuesday.