State lawmakers and Seattle-area business leaders Thursday began sizing up a Washington House bill that would allow King County to impose a new tax on big businesses with employees who earn at least $150,000 per year.

State Rep. Gael Tarleton (D-Seattle) scheduled the bill for a Feb. 4 hearing in her finance committee, Microsoft’s president signaled the Redmond-based powerhouse is interested in the proposal and a key state senator weighed in, while Seattle Mayor Jenny Durkan cautioned that the legislation’s details are likely to change.

There isn’t much time to push the bill through the state Legislature, but supporters like Durkan and King County Executive Dow Constantine have been lobbying business and labor leaders. They worked to draw up the legislation, which has Reps. Nicole Macri, D-Seattle, and Larry Springer, D-Kirkland, as prime sponsors.

Last November’s Seattle City Council elections have rejuvenated debate about taxing the big businesses whose growth has squeezed Seattle’s housing market, with returning Councilmember Kshama Sawant heading up a “Tax Amazon” campaign and calling for a city measure that would raise as much as $500 million per year.

The Macri-Springer bill would allow King County to impose a tax of 0.1% to 0.2% on compensation paid by businesses to employees making at least $150,000 a year, with exemptions for small businesses, government entities and some other companies. (On a $200,000 salary, for example, the employer would be taxed $200-$400.)

It would require the tax revenue to be spent on affordable housing, public-safety needs, homeless services and behavioral-health services. Durkan and Constantine have estimated it would raise up to $121 million per year.

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“It is no coincidence that this proposal comes right after our Tax Amazon movement has rallied with hundreds to fight for a big business tax,” Sawant said in a statement. “We will keep organizing and we will win the biggest possible Amazon Tax based on the strength of our movement.”

At a Microsoft question-and-answer session with reporters in Olympia, president Brad Smith said the company had reviewed drafts of the bill and called the proposal part of “an important conversation that we need to have.”

State lawmakers have unveiled a new version of a business tax. (Ted S. Warren / The Associated Press, file)
Washington state bill would allow King County to tax big businesses with highly paid employees

We have been making clear for the past year that we should treat the housing shortage in King County as a crisis,” he said, later adding, “We are prepared to pay our fair share of taxes.”

Expedia is backing the bill, while other major Seattle-area companies have yet to weigh in. Smith said Microsoft wants to see legislation that works “for the business community as a whole” and for the county’s suburban cities.

“I think it’s really important for the suburban cities to have an opportunity not just to study this, but to have a seat at the table,” he said.

The Macri-Springer bill needs approval not only from the House but also from the Senate, where Democrats hold a slimmer majority.

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Sen. Christine Rolfes, D-Bainbridge Island, who chairs the Senate Ways and Means Committee, said Thursday she would consider trying to advance the bill but only with broad support in the House.

Rolfes wants the House to demonstrate a “big, happy agreement” before wading in. “My preference is not to have my committee embroiled in city of Seattle and King County politics,” she said.

Business executives, politicians and activists combed through the bill’s details Thursday.

At least 43% of the revenue spent on affordable housing, public safety and behavioral health would flow to Seattle. All the revenue spent on homeless services would flow to the regional authority that the county, Seattle and other cities are creating.

The tax, according to Durkan’s office, would come from about $61 billion in compensation paid to about 185,000 employees, or about 44% of all compensation in King County.

Durkan expects the bill to undergo changes in the coming weeks, she said Thursday.

“The bill was just dropped yesterday,” the mayor said, vowing to work with various parties on details. “What’s written in the bill today won’t be what’s written in the bill in three weeks.”

Seattle already has the authority to impose a payroll tax or a head tax like the measure that the city passed in 2018 and then almost immediately repealed under pressure from critics that included Amazon.

“We welcome the announcement that King County may gain the ability to tax big business, but our movement has learned from the repeal of the 2018 Amazon Tax,” Sawant said. “We will not put our faith in corporate politicians.”

Durkan has chosen to support the county-targeted bill, rather than propose her own city measure, because the entire county is struggling, she said. Many people using services in Seattle were elsewhere in the county when they became homeless, she said.

“We want to be addressing the housing and homelessness crisis on a regional basis,” he said.

When asked about the possibility that some business leaders will seek a clause in the Macri-Springer bill barring Seattle from adopting its own big-business tax, Durkan declined to take a position.