Seattle City Councilmember Kshama Sawant outlined her new proposal Wednesday for a tax on big businesses such as Amazon, saying she intends to introduce legislation that would impose a payroll tax of 1.7% on the largest 3% of Seattle corporations, as measured by payroll in the city.
The tax would apply to about 825 companies (those with at least $7 million in annual payroll) and would raise $300 million a year, Sawant said, citing work by the council’s central staff. Supermarkets would be exempted. She said her plan would direct 75% of the money raised by the tax to build affordable housing and 25% to convert Seattle homes from gas and oil to electric systems.
“This will be working-class housing,” the councilmember said.
Sawant announced the proposal at a City Hall news conference. The actual legislation has yet to be written, and no other council members joined her Wednesday. She didn’t immediately share the staff calculations behind her plan.
Amazon declined to comment on Sawant’s proposal.
“I don’t expect Jeff Bezos to think of this as a good thing, but that’s where it matters what side you’re on,” Sawant said, referring to Amazon’s chief executive. “This is not a neutral issue.”
Seattle needs to tax big businesses because poor people “and even tech workers” are struggling to deal with the city’s pricey housing market, the councilmember said. Thousands of people are homeless in the area and a recent report by McKinsey & Co. recommended an additional $450 million to $1.1 billion in annual public spending to solve the crisis, Sawant noted.
San Francisco voters in 2018 approved a $300 million tax on large corporations to address homelessness, Sawant said.”If San Francisco can do it, Seattle can,” she said.
Seattle Mayor Jenny Durkan called Sawant’s plan the wrong approach.
Durkan helped put together a bill currently under consideration by the state House that would authorize King County to impose a tax of 0.1% to 0.2% on compensation paid by large corporations to employees making at least $150,000 a year.
The mayor has said that tax could raise up to $121 million a year. Seattle and the county are in the process of creating a regional homelessness authority, consolidating their spending and services.
“We need a new, progressive business tax to help our most vulnerable communities, which is why I worked on a plan in Olympia that has the broad support from labor, community advocates and even some in the business community who want to tax themselves to address our homelessness and housing crisis,” Durkan said in a statement.
“We know our homelessness and housing crisis is not confined to any city borders – it is a regional crisis that demands a regional solution.”
Sawant’s proposal could influence negotiations underway in Olympia. Some business leaders are pressing state lawmakers to insert a clause into the House bill that would ban Seattle from enacting a tax like Sawant’s.
“We remain firm in our belief that a coordinated countywide measure is the most effective approach,” the Downtown Seattle Association said in a statement Wednesday, arguing a citywide tax would undermine that.
Sawant spoke out Wednesday against the possibility that the city’s taxing authority could be taken away, accusing business leaders of trying to create a “tax shelter” in Seattle. She traveled to Olympia later Wednesday and held a small rally to promote her view.
Seattle adopted a $275-per-employee annual “head tax” on high-grossing companies in 2018 but almost immediately repealed it under pressure from critics, including Amazon, who slammed it as a tax on jobs. That tax would have raised $47 million a year.
Sawant started another “Tax Amazon” push after winning reelection in November. On Wednesday, she stressed she’s now calling for a payroll tax, rather than a head tax.
Durkan said Sawant’s new tax would be too large.
“I believe that big businesses can and should pay more to address our challenges, but this proposal that is six times bigger than the failed council head tax proposal is not a plan that I can support,” the mayor said.
“Being progressive means actually making progress. While slogans are nice, a failed, divisive fight that is high on rhetoric but low on outcomes … is not an actual solution.”
Earlier this week, Sawant was charged by the executive director of the Seattle Ethics and Elections Commission with violating city laws by using her office to promote a potential “Tax Amazon” ballot measure.
Sawant on Wednesday said she believes a campaign to seek voter approval with a ballot measure is needed, alongside her council legislation, to ensure that a tax is enacted one way or another.
Seattle Times staff reporter Joseph O’Sullivan contributed to this report.