Seattle just got progressive taxation. The business payroll tax passed 7-2 in the Seattle City Council on Monday is four times bigger than the "head tax" that the council passed unanimously and then quickly repealed after pressure back in 2018.
"Jeff Bezos and his billionaire friends are wishing they could call a do-over and have the modest 2018 tax back," Councilmember Kshama Sawant said during the council meeting on Monday.
Sawant has been calling for an "Amazon Tax" ever since the head tax failed. The tax that passed Monday, however, wasn't Sawant's plan. It was Councilmember Teresa Mosqueda's JumpStart Seattle tax. It's more moderate than Sawant and Councilmember Tammy Morales' Tax Amazon proposal and only taxes high incomes paid by businesses that report over $7 million in annual payroll—as opposed to Tax Amazon's flat tax on those businesses' payrolls. Four other council members signed on as co-sponsors.
Sawant has still called this a victory for her movement, saying that it was the momentum from her movement that pushed the council to adopt and nearly unanimously accept a business payroll tax. No one thanked Sawant or the Tax Amazon movement, she pointed out in a tweet late Monday night.
There were probably 20 minutes of thank yous from Councilmembers today.
Not one (other than when I spoke) thanked the Tax Amazon movement, the 100s who sacrificed, whose sweat, tears built this grassroots campaign & collected 30,000 signatures w/o which this wouldn't have passed
— Kshama Sawant (@cmkshama) July 7, 2020
"This is a huge win," Mosqueda said, not shirking any of the credit for her own tax's passage. She called it "historic."
Tim Eyman also didn't realize that Sawant wasn't the one passing legislation. He chimed in during public comment to tell Sawant that she should be in jail and that she's a "limousine socialist." I had Eyman appearing as one of the spaces on the homemade bingo card I made.
Mosqueda's tax will raise around $214 million annually. It will tax businesses at different rates depending on the payroll they report. Only compensation above $150,000 will be taxed. Bear with me here, I'll try to break it down without a sexy visual:
One last-minute amendment carved away some of that revenue. The amendment, from Mosqueda and Andrew Lewis, will exempt non-profit healthcare providers for at least the first three years of the tax since they're responding to COVID-19. Four council members (Lorena Gonzalez, Lisa Herbold, Kshama Sawant, and Tammy Morales) were opposed to the amendment since some of these non-profits are still multi-million dollar companies and receive tax breaks.
Lewis also put up an amendment that would reinstate a sunset clause for the tax. Previously, the tax included a sunset clause—in normal speak, an expiration date—after 10 years or until the county or state implement something similar. During last week's committee meeting, an amendment from Sawant expunged the sunset clause. Lewis' amendment added a sunset clause after 20 years. It passed 5-4, the same makeup as the previous vote.
Speaking of not great votes, Councilmembers Alex Pedersen and Debora Juarez held strong to their committee votes and were the two votes against the tax. Pedersen's reasoning? "I represent a city council district that has a variety of views on issues and that makes many votes difficult," he said. He'll explain more on his blog if you want to read that. While it was a typical bullshit answer, it got me to Bingo.
Later this week, the council will discuss the ins and outs of the tax's spending plan. For now, they've approved the general spending plan which will allocate money to COVID-19 relief, affordable housing, investment in the community, and environmental improvements in line with the Green New Deal ordinance.
Mayor Jenny Durkan has said that she is against a payroll tax. Ernesto Aprezo, a spokesperson for Durkan's office, told the Seattle Times that Durkan would rather have a regional 1 percent income tax on all households.
“The mayor has significant concerns about the impact on the city’s ability to rebuild an economy,” Apreza said. Durkan had previously supported making the tax a ballot initiative and allowing voters to decide, the same stance Juarez and Pedersen took.
“Our shared goal should be to ensure companies and small businesses stay and thrive in Seattle,” Apreza said.
The Downtown Seattle Association is anti-JumpStart Seattle tax, shockingly. "Taxing jobs is bad public policy," a statement from the DSA read. "Job taxes are counterproductive to job creation and have a history in Seattle of being enacted and then later repealed. This tax should follow that fate.”
If Durkan were to veto the bill, it would take six council votes to overturn.