Does anyone have the text of the initiative? A â5% payroll tax on businesses that pay employees more than $1 million/yrâ could be interpreted more than one way. Is this on stock compensation? For each employee that makes over $1 million? Or whose annual payroll costs exceed $1 million? I have to think this new tax has got policymakers worried it will result in an exodus - especially for remote workers - of highly compensated individuals out of the city, imperiling the existing Jumpstart revenue.
Does anyone have a link to the text of the proposed initiative? Hannah omitted that, despite sticking over a dozen hyperlinks in this piece.
I ask because I am trying to square Hannah's characterization of the initiative as one that will "tax big business" with her subsequent description of the initiative as one that will create a "tax on businesses that pay employees more than $1 million per year."
Based on Hannah's "reporting," I can't tell whether this tax applies to business with a total payroll in excess of $1 million (which would affect a large number of businesses) or businesses that pay individual employees salaries in excess of $1 million annually (which would affect a small number of businesses and could likely be avoided without too much trouble).
In this day and age of remote work, seems like it would be fairly trivial to game the system and not pay this tax (but like @1 pointed out, weâll need to see the text).
@1/2 they may not have filed the initiative yet which is why the text is not available. I have to think this is a tax on total payroll in excess of $1M and not on individuals who make more than $1M. The latter would be pretty limited and most executives who reach that level only do so because of stock compensation which is later taxed as capitol gains and not payroll. If that's the case it's a pretty wide net and its really not that hard for those personal services companies like financial planners that Hannah looks down upon to move to an office park outside city limits. It will be interesting to see how this plays out especially as Seattle has never refused a tax in recent memory even when they don't really work out (soda tax, ammunition tax, monorail)
If itâs a 5% tax on any business with a total
payroll over $1M it would be a staggering amount of money and a huge burden on the cityâs business. (Including, for example, a restaurant chain that had more than about 50 minimum-wage employees). . Itâs hard to believe that is what they really mean.
Also, Iâm deeply suspicious of any initiative proponent who doesnât give the press the actual text of their initiative. Hiding something in the quest for favorable coverage?
@1-5: Hannahâs tremendous lack of interest in providing the text of the initiative raises the usual red flags about the Strangerâs âreporting,â but we always knew this initiative was coming, because I-135 created only a new housing bureaucracy, not any actual new housing. It appears this initiative may never create any new housing, either:
ââŚan estimated 1,700 to 2,500 newly built and acquired social housing unitsâŚâ
So, HON may never actually build a single new residence. It may just buy existing residences, take them off the rental market, and reprice them according to their formula, reserving them to whomever HON sees fit. (This would also have the effect of raising rental prices on the remainder of the cityâs housing stock, thus raising the dollar amounts of that sliding-scale 0-120% figure.)
@9 thanks. So in reality itâs more like a CEO tax. I would think generally those are the only employees pulling down that coin. Would wonder how they calculate it. Is it actual paid comp or does it include valuation of equity in the formula.
âIf successful, the measure would levy a 5% âexcess compensationâ tax on employer payroll expenses for each Seattle-based employee paid over $1 million in annual compensation. In other words, an employer would pay a 5% tax on any dollar over $1 million in total employee compensation. Total compensation includes base salary, stock and bonuses.â
Thanks for the links, all! This doesnât sound like the stablest of revenue streams since people making over $1M are likely to be small, and mobile. But itâs less likely to chase a bunch of jobs out of town (which could be low paying but en masse would exceed the $1M mark).
That Crosscut article has a link to a press release from HON, which in turn has a link to the text of the proposed initiative. The text of the proposed initiative is available here: https://www.letsbuildsocialhousing.org/initiative-text
The gist is the tax is applicable to "persons engaging in business in Seattle" and amounts to 5% of any annual compensation to an individual employee that is in excess of $1 million. Excluded from the tax are independent contractors, and a handful of specific industries, as well as government jobs.
Super easy to game this tax with remote work or shifting highly-paid employees to a satellite office outside Seattle for a portion of their time: https://library.municode.com/wa/seattle/codes/municipal_code?nodeId=TIT5REFITA_SUBTITLE_IITA_CH5.38PAEXTA_5.38.025DECOPASEEM
I'm not sure how this will realize $52 million annually.
@14, Did they really have to exempt government jobs? La-ame. It probably only applies to a couple UW football coaches, but not loving the principle of that. Agree that the projection is optimistic. Thanks for posting the link to the actual text!
@10: Thank you and Crosscut for the link. And the expectations have already been lowered!
âThe advocacy group estimates the public development authority would be able to acquire or build 2,000 units of housing over 10 years with that new tax revenue.â
So, weâve gone from an estimate with a median of 2,100 units to 2,000, and expands on the idea of simply taking units off the market, instead of building new units:
âTo start, House Our Neighbors expects the Seattle Social Housing Developer to use the tax funds for acquisitions instead of new construction. By buying existing apartment buildings, their hope is to get the new housing model up and running faster than going through the multi-year process of new construction. The Developer would likely begin working on new construction after four or five years.â
(I like the implication that buying anywhere near 1,000 existing units of housing wonât itself become a âmulti-year processâ in modern Seattle.)
Thanks @10 for actually providing some useful information (and thanks to Crosscutâs Josh Cohen for the informative article).
Sadly, this will be trivial to defeat / avoid (as I suspected). Really wish we would focus on ending the short term rental market - that alone will do more to decommodify housing than this proposal.
From the link @14: âThe tax imposed by this Chapter is in addition to the payroll expense tax levied under Chapter 5.38.â
Chapter 5.38 is the âJumpStart Tax,â so, for employers who already pay the JumpStart Tax, this initiative would provide additional incentive to leave Seattle.
Bellevue would, no doubt, eagerly welcome all of those âwealth management and real estate companies that may not be large enough to pay into JumpStart but that still pay incredibly high salaries.â
Here's another fun legal question. Since the Social Housing strategy is to buy existing units to start (homes/condos) and then rent them out under the social housing contract are they bound by the same onerous regulations the city has set up for other landlords? They don't have an income proviso since it is not low income housing (just that you would pay x% of your income in rent) so would they have to accept the first applicant like everyone else and then be bound by the eviction moratoriums if they end up with a bad tenant? If that's the case this will be great to watch play out when inevitably progressive ideals once again collide with reality.
While weâre relying on the commenters to do the investigative work that TS should have done before publishing this piece, anyone know how many employees in Seattle actually earn over $1M?
Does anyone have the text of the initiative? A â5% payroll tax on businesses that pay employees more than $1 million/yrâ could be interpreted more than one way. Is this on stock compensation? For each employee that makes over $1 million? Or whose annual payroll costs exceed $1 million? I have to think this new tax has got policymakers worried it will result in an exodus - especially for remote workers - of highly compensated individuals out of the city, imperiling the existing Jumpstart revenue.
Does anyone have a link to the text of the proposed initiative? Hannah omitted that, despite sticking over a dozen hyperlinks in this piece.
I ask because I am trying to square Hannah's characterization of the initiative as one that will "tax big business" with her subsequent description of the initiative as one that will create a "tax on businesses that pay employees more than $1 million per year."
Based on Hannah's "reporting," I can't tell whether this tax applies to business with a total payroll in excess of $1 million (which would affect a large number of businesses) or businesses that pay individual employees salaries in excess of $1 million annually (which would affect a small number of businesses and could likely be avoided without too much trouble).
In this day and age of remote work, seems like it would be fairly trivial to game the system and not pay this tax (but like @1 pointed out, weâll need to see the text).
@1/2 they may not have filed the initiative yet which is why the text is not available. I have to think this is a tax on total payroll in excess of $1M and not on individuals who make more than $1M. The latter would be pretty limited and most executives who reach that level only do so because of stock compensation which is later taxed as capitol gains and not payroll. If that's the case it's a pretty wide net and its really not that hard for those personal services companies like financial planners that Hannah looks down upon to move to an office park outside city limits. It will be interesting to see how this plays out especially as Seattle has never refused a tax in recent memory even when they don't really work out (soda tax, ammunition tax, monorail)
If itâs a 5% tax on any business with a total
payroll over $1M it would be a staggering amount of money and a huge burden on the cityâs business. (Including, for example, a restaurant chain that had more than about 50 minimum-wage employees). . Itâs hard to believe that is what they really mean.
Also, Iâm deeply suspicious of any initiative proponent who doesnât give the press the actual text of their initiative. Hiding something in the quest for favorable coverage?
@1-5: Hannahâs tremendous lack of interest in providing the text of the initiative raises the usual red flags about the Strangerâs âreporting,â but we always knew this initiative was coming, because I-135 created only a new housing bureaucracy, not any actual new housing. It appears this initiative may never create any new housing, either:
ââŚan estimated 1,700 to 2,500 newly built and acquired social housing unitsâŚâ
So, HON may never actually build a single new residence. It may just buy existing residences, take them off the rental market, and reprice them according to their formula, reserving them to whomever HON sees fit. (This would also have the effect of raising rental prices on the remainder of the cityâs housing stock, thus raising the dollar amounts of that sliding-scale 0-120% figure.)
I canât find the text on HONâs website either. Wouldnât you think theyâd publish something this important and central to their mission?
@9 thanks. So in reality itâs more like a CEO tax. I would think generally those are the only employees pulling down that coin. Would wonder how they calculate it. Is it actual paid comp or does it include valuation of equity in the formula.
The answer is in Crosscut as well
âIf successful, the measure would levy a 5% âexcess compensationâ tax on employer payroll expenses for each Seattle-based employee paid over $1 million in annual compensation. In other words, an employer would pay a 5% tax on any dollar over $1 million in total employee compensation. Total compensation includes base salary, stock and bonuses.â
Thanks for the links, all! This doesnât sound like the stablest of revenue streams since people making over $1M are likely to be small, and mobile. But itâs less likely to chase a bunch of jobs out of town (which could be low paying but en masse would exceed the $1M mark).
@9-10, Thanks!
That Crosscut article has a link to a press release from HON, which in turn has a link to the text of the proposed initiative. The text of the proposed initiative is available here: https://www.letsbuildsocialhousing.org/initiative-text
The gist is the tax is applicable to "persons engaging in business in Seattle" and amounts to 5% of any annual compensation to an individual employee that is in excess of $1 million. Excluded from the tax are independent contractors, and a handful of specific industries, as well as government jobs.
Super easy to game this tax with remote work or shifting highly-paid employees to a satellite office outside Seattle for a portion of their time: https://library.municode.com/wa/seattle/codes/municipal_code?nodeId=TIT5REFITA_SUBTITLE_IITA_CH5.38PAEXTA_5.38.025DECOPASEEM
I'm not sure how this will realize $52 million annually.
@14, Did they really have to exempt government jobs? La-ame. It probably only applies to a couple UW football coaches, but not loving the principle of that. Agree that the projection is optimistic. Thanks for posting the link to the actual text!
@10: Thank you and Crosscut for the link. And the expectations have already been lowered!
âThe advocacy group estimates the public development authority would be able to acquire or build 2,000 units of housing over 10 years with that new tax revenue.â
So, weâve gone from an estimate with a median of 2,100 units to 2,000, and expands on the idea of simply taking units off the market, instead of building new units:
âTo start, House Our Neighbors expects the Seattle Social Housing Developer to use the tax funds for acquisitions instead of new construction. By buying existing apartment buildings, their hope is to get the new housing model up and running faster than going through the multi-year process of new construction. The Developer would likely begin working on new construction after four or five years.â
(I like the implication that buying anywhere near 1,000 existing units of housing wonât itself become a âmulti-year processâ in modern Seattle.)
Thanks @10 for actually providing some useful information (and thanks to Crosscutâs Josh Cohen for the informative article).
Sadly, this will be trivial to defeat / avoid (as I suspected). Really wish we would focus on ending the short term rental market - that alone will do more to decommodify housing than this proposal.
From the link @14: âThe tax imposed by this Chapter is in addition to the payroll expense tax levied under Chapter 5.38.â
Chapter 5.38 is the âJumpStart Tax,â so, for employers who already pay the JumpStart Tax, this initiative would provide additional incentive to leave Seattle.
Bellevue would, no doubt, eagerly welcome all of those âwealth management and real estate companies that may not be large enough to pay into JumpStart but that still pay incredibly high salaries.â
Here's another fun legal question. Since the Social Housing strategy is to buy existing units to start (homes/condos) and then rent them out under the social housing contract are they bound by the same onerous regulations the city has set up for other landlords? They don't have an income proviso since it is not low income housing (just that you would pay x% of your income in rent) so would they have to accept the first applicant like everyone else and then be bound by the eviction moratoriums if they end up with a bad tenant? If that's the case this will be great to watch play out when inevitably progressive ideals once again collide with reality.
While weâre relying on the commenters to do the investigative work that TS should have done before publishing this piece, anyone know how many employees in Seattle actually earn over $1M?