Mayor Jenny Durkan has finally weighed in on the debate over a proposed employee hours tax to fund housing and homelessness services. In short, Durkan wants the Seattle City Council keep small businesses in mind as they move forward with a new tax.
In a letter on Tuesday that was spotted by Capitol Hill Seattle Blog, the mayor urged council members to reject any “skin in the game fee” for small businesses, one of the recommendations from a task force convened to come up with progressive revenue ideas. Durkan also asked city lawmakers to carve out exemptions for small businesses, nonprofits, and businesses located in communities with high risk of displacement.
“With many small businesses facing a series of increased commercial rent, taxes, regulations and construction impacts, our City must ensure we’re protecting and reinvesting in the vibrant web of small businesses,” Durkan wrote.
The city council has been working on an employee hours tax, also known as a head tax, since last year’s budget negotiations. Council members rejected a proposal in November, and instead created a Progressive Revenue Task Force to study the city’s housing and homelessness needs and come up with revenue plans with the goal of implementing an employee hours tax by January 1, 2019.
Last month, that task force recommended the city create tax on employers that would raise $75 million per year, offering three possible tax structures for businesses grossing between $8 million and $10 million per year: a payroll tax, a per-employee tax, and a combination of the two. The task force also recommended a “skin in the game” fee of $395 per year for business making less than the gross revenue threshold.
On top of rejecting the “skin in the game” proposal, Durkan’s letter also calls on the council to pass new tax relief measures for small businesses, including a three-year exemption on gross receipt taxes for startups.
Durkan’s letter arrived on the same day council members met with small business owners over the proposed employers. As independent journalist Kevin Schofield reported, most of the participants urged the council to reject a “skin in the game” fee and preferred a payroll tax over an employee hours tax.