‘JumpStart Seattle’ payroll tax on big businesses raised at least $231 million in its first year

Seattle’s new tax on big businesses yielded more money than expected in its first year, raising $231 million in 2021 to help the city address the COVID-19 pandemic and other issues.

The City Council passed the “JumpStart Seattle” tax on high salaries at large corporations in mid-2020, after COVID-19 disrupted the economy and put many residents out of work.

Under JumpStart, businesses with at least $7 million in annual payroll are taxed on salaries paid to Seattle employees who make at least $150,000 per year. The tax rates range from 0.7% to 2.4%, with the top rate aimed at super-high salaries at giant companies like Amazon.

The tax took effect last year, and the projected revenue was built into the city’s 2021 budget.

The city initially predicted that the tax would raise $214 million, later revising that estimate to $200 million. But the actual payments weren’t collected and tabulated until this month. The 2021 payments have amounted to $231 million to date, Councilmember Teresa Mosqueda announced Monday.

“JumpStart is a victory for everyone in Seattle,” because the tax kept the city “out of the red” last year and will fund affordable housing projects moving ahead, Mosqueda said in a statement.

The city’s 2022 budget allocates $234 million in projected proceeds from the tax to affordable housing and to other programs and services.

Approximately 300 businesses have paid the tax for 2021, and the city expects to receive some additional returns in the coming weeks, said Melissa Mixon, a spokesperson for the Department of Finance and Administrative Services. Government entities and grocery stores are exempt.

Mosqueda championed “JumpStart” in 2020, with Councilmember Kshama Sawant also pushing to tax big businesses like Amazon. They said the tax was needed to address economic disparities and argued Seattle’s large corporations could afford to pay. Councilmembers Debora Juarez and Alex Pedersen voted against the tax, arguing it could hurt the economy during a turbulent time and should instead be sent to the ballot.

Then-Mayor Jenny Durkan also opposed the tax, which she warned could encourage businesses to shift jobs out of Seattle, prove vulnerable to the remote work trend and encounter legal trouble.

The Seattle Metropolitan Chamber of Commerce sued to block the tax, but a King County judge dismissed the challenge last June. An appeal by the Chamber has been pending since July.