Recognizing that city leaders have relied on the progressive JumpStart payroll tax to fill disastrous budget shortfalls the past couple of years, Seattle will convene yet another task force to brainstorm new progressive revenue streams. They hope the money will fill the routine gaps in the City budget, though the political viability of any new tax proposal remains unclear. 

The 2018 progressive revenue task force produced several recommendations, including a head tax, which big business fought tooth and nail. However, the members of the new work group– including big business, labor, housing developers, policy experts, and also the owner of Tutta Bella–expressed hope that this one will be improved by the presence of the Seattle Chamber of Commerce, which threw a temper tantrum last time and refused to come to the table. 

Designing a tax alongside business could limit the scope of the conversation, but the Chamber claims to be an ally in the search for more revenue streams. After all, business relies on the government to pick up the tab on all sorts of social programs in order to underpay their workers.

Over the next few months, the new “Revenue Stabilization Work Group” will create recommendations to propose in the second quarter of 2023 for implementation by 2025. Some options they might consider include an employment tax, an estate tax, and a vacant unit tax. Additionally, the group will make plans for moving away from regressive revenue streams, such as sales taxes and parking taxes. 

The Headache Over the Head Tax

The City has gone down this road before. 

In 2017, former Council Member Mike O’Brien proposed a flat head tax during budget negotiations. Big business went nuts, the council narrowly voted down the bill, and the City decided to convene a task force in 2018 to explore the proposal. 

The City set the table for big business to come, but the Seattle Metropolitan Chamber of Commerce refused the invite. As the former chair of the Chamber told the Atlantic, “Business declined to participate in that task force, because it was showing up to something where you are going to be yelled at, and you will not be listened to.”

Lisa Daugaard, who sat on the task force in 2018, said the lack of buy-in from large corporations doomed that group's recommendations from the start. Big business, aligned with NIMBYs who didn’t trust the City with any new money, met the group’s recommended head tax with iron-clad opposition. Amazon even made thinly veiled threats to take its business elsewhere.

Still, the council passed a compromise head tax in the spring of 2018. But when business began to pour money into a powerful referendum campaign, the council sensed the winds of public opinion had changed, and they played a cowardly Uno reverse card on the legislation just a month later. 

“It was a huge waste of time,” Daugaard said of the hours spent designing the tax. “We can’t afford those kinds of self-inflicted injuries when it comes to finding new revenue streams.”

Business has Changed! They Won’t Hurt Us Again!

But Transit Riders Union General Secretary Katie Wilson, the only member of both the 2018 task force and the new Revenue Stabilization Work Group, said this time will be different. Even though the 2018 task force already offered an appendix full of other progressive revenue recommendations, Wilson said the new work group will explore those ideas in greater depth and, most importantly, they will do it with upfront buy-in from big business, particularly the Chamber. 

With the temper tantrum the Chamber threw over the head tax, one might not expect them to be very open or cooperative partners. But Wilson said the tenor has changed after the success of JumpStart and after a change of leadership at the Chamber. Besides, the work group is not looking specifically at taxing big business this time, which she hopes will “turn down the temperature on what could otherwise be very contentious conversations.”

“I don't see why [business] would object to having as full as possible a picture of what the options are for progressive revenue,” Wilson said. 

Of course, interest groups can and have subtly limited the scope of conversation in these City-run task forces before. To take just one example, the council recently put the Seattle Department of Construction and Inspection (SDCI) in charge of a stakeholder group that could recommend abolishing design review, a program housed within its own department. This summer, several members of that group felt the department stifled conversation.

But the Chamber is not running this new progressive tax task force. Council Budget Chair Teresa Mosqueda and the Mayor’s Office are running it. 

What’s In It for Business? 

Mosqueda doesn’t question big business’ commitment to progressive revenue. Now that Seattle has a concrete example of progressive revenue at work, she said she won’t have to “stand on her soap box” anymore. JumpStart proved that everyone benefits–including businesses–when the City has enough money to help the most vulnerable. 

Even if taxes help business, the Chamber still fights them off. But the Chamber stopped its two-year lawsuit against JumpStart earlier this year, which is a sign, perhaps, that its new CEO is turning a new leaf. 

Rachel Smith, who took over as the Chamber’s CEO at the end of 2020, hoped the conversation wouldn’t “devolve into who is pro-tax and who is anti-tax.” After all, she believes taxes are not “inherently good or inherently bad” but rather “a means to an end.”

Smith said she will come to the task force with an open mind, and she refused to provide examples of taxes she would or would not support. But she knows she wants any new taxes to pay for improved public safety, ending homelessness, and making the City overall more affordable. 

She broke “affordability” into three components: Lower upfront costs to start a small business, affordable child care, and affordable housing–not just for the poorest Seattleites, but also the tech couples who both make six figures but can only afford an “800 sq ft cottage that costs $1.2 million and needs $100,000 of improvements.” She said the City cannot just rely on taxes to solve Seattle’s issues. They’ll have to marry resources with policy, such as changes to zoning and permitting, too. Spoken like a true market urbanist! 

Smith said addressing these issues would help business by improving the “quality of life” of employees. Mosqueda gave a clearer example. She described a business owner who she said wanted the City to subsidize child care so their employees wouldn’t stress about leaving on time to pick up their kid and then catch three buses to return home. 

If the City pays more for child care and transportation, especially in a way that doesn’t target profits, then businesses won’t have to raise wages so their employees can afford the current cost of living where they work. And if employees live close by, then they can work more flexible hours. That’s the kind of socialism capitalists can get behind!

Regardless of how business, labor, and the policy experts mesh in the task force, Mosqueda said she is “committed to acting with urgency.” With grim projections for the City’s revenue shortfall, she added that “we do not have another option at this point.”