Seattle City Councilmember Kshama Sawant sought to steam ahead Wednesday with her proposal to have the city raise $300 million a year by taxing big businesses such as Amazon, releasing draft legislation and adding Councilmember Tammy Morales as a co-sponsor.

Sawant and Morales held a news conference at City Hall on a proposal to raise money for affordable housing, hoping to put pressure on their council colleagues and on state lawmakers at the Capitol, where a bill that would let King County tax large corporations may have stalled.

“As we wait through another legislative session for Olympia to address our state’s upside-down tax structure, the city must move forward … and act to provide the housing we need,” said Morales, whose support could boost the plan previously only backed by Sawant.

Seattle City Councilmember Kshama Sawant and her supporters hold a rally at City Hall to announce her legislation she hopes to pass to tax big businesses on Feb. 12, 2020. (Greg Gilbert / The Seattle Times)
Seattle City Councilmember Kshama Sawant and her supporters hold a rally at City Hall to announce her legislation she hopes to pass to tax big businesses on Feb. 12, 2020. (Greg Gilbert / The Seattle Times)

The Legislature has been considering a bill supported by Seattle Mayor Jenny Durkan and King County Executive Dow Constantine that would authorize the county to raise as much as $152 million a year by taxing compensation paid by big businesses to employees making at least $150,000 a year.

No action was taken on the bill during a House Finance Committee meeting Monday, and a co-sponsor expressed concern that the concept might not succeed because some large employers are withholding support. The Legislature’s session ends next week.

Some business leaders have been lobbying for a clause that would ban Seattle from adopting its own tax. Seattle council members and some state lawmakers have spoken out against that idea.

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“I’ve learned in my time here that anything can happen quickly. But the window of opportunity is starting to close,” Rep. Nicole Macri, D-Seattle, said in an interview Monday. “To get the votes for a bill like this, we need a really loud and enthusiastic coalition, and we don’t have that now.”

Negotiations are still happening, Macri said.

In a statement, a spokeswoman for the Seattle Metropolitan Chamber of Commerce said the group “has long believed that addressing our affordable housing and homelessness challenges requires a regional approach.”

“We support the hard work legislators and stakeholders are doing in Olympia right now, and strongly urge policymakers to approve a predictable way for King County to raise new revenue while demanding accountability and results,” said the spokeswoman, Alicia Teel.

The Seattle legislation shared Wednesday by Sawant and Morales would impose a tax on corporations with at least $7 million in annual payroll. The payroll tax would cover about 825 companies, or about 3% of all Seattle businesses, the council members said.

When Sawant initially outlined her proposal last month, she said the tax rate would be 1.7%. But Wednesday’s legislation calls for a rate of only 0.7%. New wage and employment data obtained by council staff has shown that the lower rate could yield $300 million a year, she said, arguing the change should make the tax more palatable to business leaders.

“This is less than 1% on the wealthiest people who own the wealthiest corporations in our city,” Sawant said. “I defy Jeff Bezos to explain to us why the richest guy in the world … cannot pay a tax rate of 0.7%.”

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The Sawant-Morales legislation would exempt government entities, schools, health care entities and grocery stores. Payroll covered by the tax in 2021 would total about $44 billion, according to state data shared by the King County Office of Economic and Financial Analysis, staff director Kirstan Arestad said.

Under the legislation, which could be introduced soon, 75% of the tax revenue would be spent on affordable housing and related services, while 25% would be spent on clean-energy upgrades to existing homes, the council members said.

Soliciting donations

The push for legislation comes amid scrutiny of a Tax Amazon campaign outside City Hall that Sawant has helped lead and that has yet to disclose its finances.

Sawant and allies, including her Socialist Alternative political group, have been trying since January to build public momentum for her legislation and, at the same time, for a potential ballot measure. Their Tax Amazon organization has been soliciting donations and hosting community conferences to lay the groundwork for a ballot measure, and a march in Seattle this past Sunday drew several hundred participants.

Meanwhile, Sawant has been charged by the executive director of the Seattle Ethics and Elections Commission with violating city laws by using her office to promote the potential ballot measure. She’s described the matter as a misunderstanding, but she could be fined.

Also, the Washington State Public Disclosure Commission is reviewing complaints that the Tax Amazon campaign has violated state laws by not registering as a political committee or reporting fundraising and spending.

State law says registration must occur after a group has the “expectation of receiving contributions or making expenditures” in support of a ballot measure. The campaign responded Feb. 27 that registration hasn’t been necessary because a ballot measure has yet to be filed.