The Seattle City Council sent a message Monday to state lawmakers: Allow King County to tax big businesses more than $121 million a year, but don’t take away the city’s ability to also tax large corporations.
“We support regional solutions using progressive revenue sources,” the council wrote in a letter Monday. “But we cannot currently support attempts that … strip us of our limited resources and make our city’s tax code even more regressive.”
The Washington House is considering a bill that would allow King County to raise money for affordable housing and homeless services by imposing a tax of 0.1% to 0.2% on compensation paid by businesses to employees making at least $150,000 a year, with exceptions for small businesses, government entities and some other companies.
Seattle Mayor Jenny Durkan, who helped put together the proposal, has estimated the tax could raise up to $121 million a year. The House Finance Committee voted 8-4 Friday to advance the bill, with Democrats rejecting some amendments proposed by Republicans.
Time is quickly running out in this year’s short state legislative session, and House Bill 2907 still must clear several votes. But many businesses, labor unions, community organizations and social-service providers are backing the idea.
Heavyweights like Amazon, which opposed the “head tax” on large corporations that Seattle passed and almost immediately repealed in 2018, are supporting the concept behind House Bill 2907, describing the proposed county tax as a better way to address what has become a regional homelessness crisis.
But some business leaders are pushing to add a clause to the bill that would bar (or preempt, in political lingo) cities from enacting similar taxes, saying they don’t want to be slammed by multiple jurisdictions. Looming in the background is a “Tax Amazon” campaign led by Seattle Councilmember Kshama Sawant, who has called for a much larger tax.
House Bill 2907’s sponsors, Reps. Nicole Macri, D-Seattle, and Larry Springer, D-Kirkland, said Friday they would meet with stakeholders this week to discuss potential changes.
That’s why the Seattle council wrote Monday to Macri and Sen. Karen Keiser, who’s working on the issue in the Washington Senate. The letter drawn up by Councilmember Teresa Mosqueda warned the Legislature against a preemption clause and was signed by eight of nine council members, according to Mosqueda’s office. Councilmember Debora Juarez was absent.
“The city’s taxation power is already extremely limited,” the letter said, arguing the change could put Seattle “at a disadvantage” compared to cities outside King County.
Durkan has declined to take a position on the preemption question.
The council’s letter also urged the Legislature to boost the tax rate that King County would be allowed to adopt. McKinsey & Co. researchers recently published a report recommending an additional $450 million to $1 billion in annual public spending to solve the area’s homelessness problem.
“Increase the total revenue authority in HB 2907 to more closely align with the substantial needs across our region,” the letter recommended.
Sawant proposed a resolution Monday opposing a preemption clause in House Bill 2907 and calling on Durkan to oppose it, as well. Her council colleagues voted 5-2 against the resolution, with only Councilmember Tammy Morales joining her.
The mayors of Auburn and Kent expressed concern last month that they weren’t included in the conversations that led to the bill.
Redmond City Councilmember David Carson said Monday he’s worried a King County big-business tax could discourage companies like Microsoft from helping cities add infrastructure to ease congestion around their campuses.