When the Seattle City Council narrowly voted down a head tax on businesses last year, members vowed to revisit the issue in March. The deadline’s approaching, but a lot is still up in the air.
A Seattle task force will start wrapping up its work Thursday, setting the stage for the City Council to pass a new tax on high-grossing businesses like Amazon.
Supporters and opponents agree the council will almost certainly greenlight some version of the so-called “head tax” next month and allocate the money to combat homelessness.
Exactly how much money the tax would raise, which businesses would pay it and how the dollars would be distributed are among the details still to be sorted out.
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That move put the idea on the political back burner, but not for long, because the council vowed to revisit it with recommendations from the community task force and adopt a head tax (also called an employee-hours tax) or something similar by March 26.
To keep the council on track, the task force must make significant progress at its penultimate meeting Thursday, said co-chair Tony To, the executive director of HomeSight, a South Seattle nonprofit.
Underlying the debate is the knowledge that rising property taxes are “really hurting” residents and that Seattle’s homelessness crisis is “worse than it’s ever been,” To said.
“People don’t want to keep talking. They want to reach a conclusion,” To said.
The $25 million-per-year-proposal rejected in November — as the council finalized the city’s 2018 budget — would have taken 6.5 cents per employee, per hour, from companies grossing more than $10 million per year (about 5 percent of all businesses in Seattle).
Serving on the task force are people from various organizations — including nonprofits that build affordable housing — and walks of life, including people who have been homeless. Also taking part are Ian Eisenberg, owner of Uncle Ike’s pot shops; Tom Matthews, president of Walsh Construction; and Jesiah Wurtz, owner of Cafe Red.
Other businesses are sitting out the panel in protest. The Seattle Metropolitan Chamber of Commerce, which represents 2,200 companies, including heavy hitters like Amazon, declined an invitation because its members saw no point in serving on a panel wedded to an idea they oppose, said Markham McIntyre, chief of staff.
Though the council resolution that created the task force leaves room for the panel to explore other “progressive” revenue tools, it says the recommendations should include an evaluation of a head tax capable of raising $25 million to $75 million a year.
“This is a sham process,” McIntyre said in an interview. “They have a predetermined outcome.”
In past years, the chamber and its members have warned about job losses and price hikes in battling policies, such as minimum-wage increases, that boost business costs. The organization is taking a different tack this time around, with McIntyre instead stressing the damage he says a head tax would do to morale among business owners.
“The business community is the punching bag,” he said.
McIntyre claims companies already are doing their share. Taxes paid by businesses account for more than half the city’s general-fund tax revenues, he estimated, and Seattle’s existing business-license taxes (also called business-and-occupation taxes) are higher than in other Washington cities.
Rather than demand more money, the council should first improve its homeless-services system to house more people with the dollars already coming in, he said.
The chamber is involved in a regional “One Table” work group on homelessness led by King County Executive Dow Constantine and new Seattle Mayor Jenny Durkan, who expressed some concerns about a head tax during her campaign.
But McIntyre knows the odds may be against him in the council’s chambers right now.
Seattle residents see Amazon boss Jeff Bezos making money hand over fist, and they also see people without homes struggling to survive under the city’s bridges and overpasses.
“There’s a very challenging environment at City Council these days,” McIntyre said.
“Even council members who might agree with our position on a jobs tax — they have a tough time making headway with some of the louder voices at City Hall,” he added.
Katie Wilson, general secretary of the Transit Riders Union and a member of the council’s task force, has helped lead the chorus of those saying a head tax is needed.
The advocate has little patience for McIntyre’s argument that the city should do more with the money it already has — not with thousands of people sleeping outside and sometimes dying.
“We have nearly 23,000 households paying more than 50 percent of their income on rent and utilities — in addition to homeless people,” Wilson said.
“Those are enormous numbers. Clearly, to really get at the homelessness crisis, we need to create a heck of a lot more low-income housing,” she added. “That’s going to cost hundreds of millions of dollars per year.”
Wilson believes the council should immediately adopt a head tax bringing in the maximum $75 million per year and “aggressively study some other progressive options that can get us to an additional $75 million.”
She’ll push that Thursday, while some other panel members may argue for a head tax closer to $25 million per year. Tony To hopes the group will find common ground. “We don’t have consensus yet,” he said, predicting “some kind of vote at some point.”
The panel’s last meeting is scheduled for March 1, but the council resolution says the recommendations are due by Feb. 26, making Thursday’s meeting key.
The debate could touch on exemptions for companies in sectors with lower profit margins, and task-force members have talked about the city trying to impose a graduated head tax — with higher rates for larger businesses. But the state’s constitution and laws constrain how far Seattle can go in that direction, Wilson said.
Seattle had a short-lived head tax a decade ago that funded transportation projects, but the council repealed it in 2009, during the recession.
In the end, the decisions that matter will be made at City Hall, and it’s unclear how much weight the task force’s recommendations will carry with the council.
Councilmembers M. Lorena González and Lisa Herbold are chairing the community panel, along with To and former Councilmember Kirsten Harris-Talley.
González was on the winning side of the council’s 5-4 vote in November to pump the brakes on a head tax. Herbold voted on the losing side, with council members who wanted to adopt a head tax immediately, as part of the city’s 2018 budget.
The proposal initially targeted businesses grossing more than $5 million per year, but the tax’s proponents moved the threshold to $10 million in search of a fifth vote.
González and Herbold could champion the task force’s recommendations next month, use them to negotiate or set them aside.