As of Monday, the only business payroll tax that the Seattle City Council will continue discussions on is Teresa Mosqueda's JumpStart Seattle plan. There are currently two different payroll taxes and one capital gains tax under consideration.
Mosqueda announced that Councilmembers Kshama Sawant and Tammy Morales had reached an "understanding" that makes JumpStart Seattle tax the base legislation for the council's conversations around a progressive payroll tax. The goal is to tax businesses to raise money for COVID-19 relief and housing.
This will allow the council to "streamline" any amendments or modifications to the bill and to "focus" their deliberations, Mosqueda said. In the week since she announced the proposal, Council President Lorena Gonzalez and Councilmembers Lisa Herbold, Andrew Lewis, and Dan Strauss have all signed on to co-sponsor the bill. Sawant and Morales didn't get any co-sponsors to their bill that's been on the table (with a few hiccups that stalled its progress) since April.
Mosqueda's payroll tax is estimated to raise around $200 million through taxes on companies that report over $7 million in annual payroll and companies that report over $1 billion in payroll. It will only tax the paychecks of high-earners (over $150,000) at different rates.
Companies in the $7 million to $1 billion payroll threshold would be taxed at a rate of 0.7 percent for employee payrolls over $150,000 (and at 1.4 percent for any salaries over $500,000). Then, there's a whole different tax rate for companies with payrolls over $1 billion. At those companies, employee payrolls over $150,000 would be taxed at a rate of 1.4 percent, and the over $500,000-earning paychecks would get slapped with a 2.1 percent tax rate.
Sawant and Morales have been pushing their own Tax Amazon legislation—a flat 1.3 percent tax on all businesses with payrolls over $7 million—for months. The deliberations on that package, which would tax more businesses and raise around $500 million for COVID-19 relief and housing than Mosqueda's plan, have pretty much ceased.
Morales said in the council briefing today that she's already planning two amendments to the tax: one to look into raising more revenue and another that would fix the problems she sees with the sunset clause that's included in the plan.
Mosqueda's tax has a sunset clause that states that the tax will end after 10 years or once the state or King County takes up a similar tax. Morales told The Stranger last week after she had first read Mosqueda's tax that the sunset clause raised "red flags" for her.
"I think we are finally pushing the conversation about how we need progressive revenue in the city and that we need our corporate neighbors to participate in funding public services," Morales said. "I don’t want to cede that conversation."
Her amendment on the sunset clause would remove the "after 10 years" portion. That way, the tax would only sunset if "other jurisdictions pass these progressive revenue packages" where Seattle would receive a similar amount of money as Mosqueda's proposal would raise, Morales said.
Her other amendment will address the revenue gap between Mosqueda's tax and Morales and Sawant's tax. She's hoping to "get us closer to the $500 million" that was in the Tax Amazon legislation, Morales said.
Gonzalez thanked Morales and Sawant for agreeing to let Tax Amazon take a backseat since "it signifies the unity that is needed by the city council around identifying strong progressive revenue proposals."
There's still a Tax Amazon ballot initiative in the works. Lewis also has submitted his proposal for a capital gains tax that will raise $36 million. That tax, Lewis said, would be a good compliment to Mosqueda's payroll tax.
The discussion on Mosqueda's tax will continue on Wednesday morning during the council's Select Budget committee, which Mosqueda chairs.
