New proposal would tax big businesses to fund affordable housing, coronavirus relief
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A Seattle City councilmember this week proposed a new payroll tax on large corporations to help provide relief as the city begins its financial recovery after the novel coronavirus pandemic and to create more affordable housing moving forward.
The "JumpStart Seattle" plan proposes a tax on corporations with payrolls of $7 million or more and employees with salaries of $150,000 or more. It is estimated it will generate about $200 million.
Councilmember Teresa Mosqueda said in putting together the plan, she and her team worked with hundreds of people in Seattle and a variety of different organizations.
"Organizations and individuals across Seattle have all underscored the same points: Our community is hurting. Our economy is tanking. We cannot wait for the state or feds," Mosqueda said on Twitter. "We have to act now to help Seattle."
The coronavirus pandemic didn't cause the economic crisis alone, Mosqueda said.
"It merely ignited an already fragile economy that saw a lot of growth at the top but left thousands of people behind — including workers of color and small business," she said.
Now, she said, the city can jump start Seattle in an "equitable" and "inclusive" way.
Under the plan, corporations with a payroll between $7 million and $1 billion would be taxed at a rate of 0.7%. For employees making $500,000 or more, those companies would be taxed at a rate of 1.4%. Corporations with payrolls of more than $1 billion would be taxed at rates between 1.4% and 2.1%.
At least 97% of businesses wouldn't be impacted by the tax, the proposal said.
"Washington has the most regressive tax system," the plan said. "The poorest people in Washington pay the largest share of their income in taxes and the richest pay the smallest portion of their income."
The tax wouldn't go into effect immediately. But, included in the proposal, the city could start using its emergency and rainy day funds and would use revenue from the tax in the future to replenish them. The funds would go toward a number of issues.
More immediately, as the economy reels from the coronavirus pandemic, money would help provide resources to small businesses, immigrants and refugees and people struggling to pay for rent and food. Moving forward, the plan would help fund more affordable housing, a dire need in the city as thousands of people are experiencing 凯发k8地址homelessness and housing insecurity every day. The plan is also prioritizing equitable development, addressing "systemic inequities and creating economic opportunities."
After 10 years, or if the county or state puts into place a similar tax, the city tax would sunset.
Richard de Sam Lazaro, from Expedia Group, said during a meeting Tuesday on the proposal that the company is committed to partnerships that help to address some of the city's biggest challenges. He thanked Mosqueda for including the business in the conversation.
"While we are concerned about any new city tax in this period of economic uncertainty, this is a necessary conversation so progress can be made on state and regional solutions," he said.
The Downtown Seattle Association released a statement in opposition of the tax, instead calling on council to shift its focus to getting people back to work.
“We continue to believe taxing jobs is bad public policy, and it’s especially ill-advised as we enter what is likely a deep recession and an unprecedented rise in unemployment," the DSA said in a statement.
This is one of several payroll taxes that have been proposed over the past several years.
Councilmember Kshama Sawant, who for years has been fighting for a tax on Amazon and other big businesses, earlier this year released legislation along with Tammy Morales. Under that proposal, officials estimated the city could bring in about $500 million each year to go toward affordable housing and other issues. Sawant has come out against at least a portion of Mosqueda's proposal.
"Our Amazon Tax movement opposes a 'sunset clause' on any future big business taxes," she tweeted. "Having a 10-year sunset will actually *disincentivize* big business from conceding to regional/state tax, as they'll have no need to negotiate because they would know our city tax is going away."
Our Amazon Tax movement opposes a "sunset clause" on any future big business taxes.— Kshama Sawant (@cmkshama) June 17, 2020
Having a 10-year sunset will actually *disincentivize* big business from conceding to regional/state tax, as they'll have no need to negotiate because they would know our city tax is going away.
Earlier this year, state lawmakers also considered a bill that would allow King County to impose a payroll tax on large businesses with employees making $150,000 or more. Officials estimated that proposal would bring in $121 million each year to go toward services including constructing and maintaining affordable housing and providing for housing, shelter and other 凯发k8地址homelessness interventions. That proposal did not advance.