The Seattle City Council’s Finance and Neighborhoods Committee held a special meeting on their proposed employee hours tax shortly after the Seattle Times broke the news that Amazon has paused construction on a new 17-story tower and is looking at options to sub-lease their recently leased Rainier Square Building.
As a testament to the complexity of the issue, the agenda for the meeting outlined a broad range of business tax issues scheduled for discussion, but the committee was only able to make it part-way through one item during the hour and a half meeting. Though Amazon’s announcement was brought up by several speakers during the public comment period, Council member Kshama Sawant was the only council member to address the announcement during the meeting.
“I think it’s absolutely critical that we do not accept this kind of extortion,” said Sawant.
Public commenters agreed, with two speakers referring to the move as a “blackmail attempt.”
Instead, the majority of the meeting was spent discussing concerns and possible amendments to the business tax proposal.
As it is currently written, the “Progressive Tax on Business” would apply only to Seattle businesses that make $20 million or more a year. This constitutes about 3 percent of all businesses in the city.
Starting in 2019, the proposal would require these businesses to pay 26 cents per hour for every employee or about $500 per employee per year. Then, starting in 2021, the tax would phase out and be replaced by a business payroll tax that would put a 0.7 percent tax rate on the same businesses.
The business tax is expected to bring in about $75 million each year. Under the tax proposal, about $20 million of that revenue would come from Amazon alone. Of the $75 million collected, 75 percent would go toward funding affordable housing and 20 percent would be spent on emergency and shelter services for those experiencing homelessness. These services include criminal justice diversion programs, sanitation and hygiene services, and the creation of tiny homes.
Council member Teresa Mosqueda broke down the allocation in an email to her supporters:
One change brought up during the meeting was perhaps altering the tax rate to increase the collected revenue to $150 million annually. This motion was strongly supported by Council member Sawant.
The committee also discussed the possibility of providing partial tax credits for businesses in their first year qualifying for the tax, clarifying the proposal’s non-profit exemption, and introducing incentives for businesses to donate to charitable organizations.
Though the committee didn’t have time to run through the whole list of possible changes, the committee documents show they will also consider eliminating the sunset date of the employee hours tax and consider exempting businesses involved in life sciences, medical research, and health care delivery.
Also on the agenda was a discussion of the 5-year spending plan for the tax revenue, performance goals and standards, and details on housing production goals. With a vote on the proposal less than two weeks away, Council member Sally Bagshaw said they will need to quickly schedule another special meeting to discuss these issues. The committee is expected to vote on the legislation on May 9th and it is scheduled for a full council vote on May 14th.
After the meeting, SCC Insight tweeted out a quick interview with Council member Bagshaw where she said she was not optimistic about meeting their timeline to pass the legislation. “We’re going to need more time,” said Bagshaw.
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