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Here’s how Seattle’s proposed tax on businesses to pay for homelessness services would work

With reporting by SCC Insight

The Seattle City Council’s proposed legislation to impose a new tax on businesses to help pay for homelessness services has finally seen the light of day and will begin its path through the council chambers with a committee meeting this week.

The proposal from the council’s Lorena Gonzalez and Lisa Herbold aims to raise at least $75 million annually to address the twin crises of affordable housing for the city’s most vulnerable people, and the increasing number of people living unsheltered. It comes in two parts: an ordinance that enacts the tax, and a resolution that lays out the spending plan.

The most crucial new element in the released ordinance is this key exemption: All companies with taxable gross receipts in Seattle of less than $20 million won’t pay the tax. Also, all registered nonprofits are exempt, as are organizations that the city can’t legally tax including federal and state governmental agencies, insurance companies, companies making or selling motor fuel, and liquor distributors.

The proposed ordinance also calls for a split in how the tax is assessed: for 2019 and 2020, it’s a a straight-up employee-hours tax, then in 2021 it switches over to the more complicated infrastructure of tracking a payroll tax that varies by salary, a key ask of business representatives.

The employee-hours tax would be approximately $500 per year for a fulltime employee (about 26 cents per employee-hour worked). The payroll tax would be 0.7%, which means the two taxes are equivalent for an employee making about $36 per hour. Both taxes only apply to employee-hours worked in Seattle.

The resolution, meanwhile, lays out the spending plan for the first five years: 2019 through 2023. It’s a high-level plan that allocates the revenues to several categories of investments and calls upon the executive branch to deliver a detailed implementation plan by December 14.

The bill will be discussed in the Finance and Neighborhoods Committee on April 25 and May 2, with amendments and an anticipated vote out of committee on May 9 and final approval by the full Council on May 14. Public hearings on the bill will be held on the evenings of April 23 and May 2.

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34 thoughts on “Here’s how Seattle’s proposed tax on businesses to pay for homelessness services would work

  1. So 75% of this is a housing levy. What happened to the other (recently doubled) housing levy?

    And the services money is being used mostly to maintain people in homelessness, not get them out.

    300 shelter beds for $75 million a year. That is literally the only potentially useful piece. GTFO here with that BS.

    Seattle, spend all this money if you want. Just KNOW that it will do NOTHING to reduce the homelessness crisis. This is a straight up cash grab and the people sponsoring it should be ashamed to use the homeless as the face of it.

    • Those are pretty serious accusations. Have any proof or evidence to back up a claim that people “sponsoring it” are involved in a cash grab? What do you think they’re going to do with this money? Buy a jet and a couple of mansions, like a mega-church pastor?

  2. Putting aside the failed policies on the homeless at both city and county levels, and the lack of accountability for those policies, what is the logic of continuing to look to Seattle businesses to pay for these types of programs? Why aren’t all Seattle residents being asked to fund the programs, including those who work for the city?
    If that were the case, perhaps the Council would hear from a broader spectrum of those being asked to foot the bill, instead of the demonized business community.

    • The fantasy here is that everything in the past has “failed” because the homeless are still here. Those programs have been largely successful. They’re just not enough. And–oh, boo hoo!–the poor demonized business community. So demonized that Seattle is one of the most successful cities in the United States. It seems to me that business gets its ass regularly kissed in a thousand different ways. But the one time they have to step up, they’re “demonized.” It’s amazing how many professional victims exist among the right wing in this country.

  3. It would be one thing if this was truly a housing levy with clear accountability on how the funds would be spent and requirements that it go to building actual housing. But that isn’t what the SCC is proposing. The only substance here is a high level resolution suggesting that a portion be used to develop housing, but there is nothing the binds the council or the mayor from then promptly turning around and raiding the new funds to address the “homeless emergency” with the same failed tactics they have been using. Voters need to understand that this is NOT like a levy where the funds will be tied to a specific purpose, rather it is a bait and switch to add funds to an already unaccountable/failed money pit. No other proof of that is needed than the fact that the SCC is rushing to pass the tax before even having a fully developed plan on how the new funds will actually be spent.

    • It’s spelled out pretty clearly how the money will be spent. But then you’d have to read and do a little research. And why do that when you can come here and whine?

  4. The one proven solution to getting people back on their feet is a job, and the increase in self-worth and personal pride that comes along with work and self-reliance.

    So, naturally, the city that’s done its best to enable and prolong homelessness (as opposed to ending it) would penalize the very companies that PROVIDE jobs.

    As somebody with firsthand experience of how the game works, I can tell you there is a quid pro quo going on here: after that $75,000,000 is distributed to social service / social activist groups and agencies, the politicians who spearheaded and supported the tax get campaign contributions from the leadership and staff of those groups. More importantly, when campaign season arrives and foot soldiers are needed, the same social service agencies are quite good at providing dozens (some times hundreds) of people to knock on doors, etc.

  5. I make a decent living, but I spend so much time at work (40 whole hours! every week!) and too much of paycheck on my monthly rent! I think I’ll quit my job, work part time retail, and collect all these free goodies from the city! My stress will go down, I’ll have a nicer apartment, and plenty of time to sit and relax!

    • A nice apartment in Seattle on part time retail? I’m sure you won’t endure hardship, what with all these imagined freebies? Which are being handed out…where? You might want to do a little research, Mr. Resentment, before quitting your decent living job. Or you could just move to a Red State. They have lots of part time retail jobs and just think of all the time you’ll have to sit and relax. It’s not like no one will ever take your job in Seattle.

  6. Sounds like a plan, Davey. They only thing you need to do is invent a disability for yourself. Not only will you get free plane rides for your service animal, but you also get free, unlimited parking for life!

    In February of 2016, the Seattle Times featured some traveling hipster-hippy types who were living in Seattle’s ill-fated RV lot in Ballard. They were able-bodied 20-30 somethings with lots of dogs and a nice flat-screen TV who had figured out a way to stay high on dabs all day, and have the elite guilt practitioners at Facing Homelessness pick up the bill. The group even bought these wake & bake boys an SUV.

    As to why the homeless hipsters in the school bus didn’t even bother to find work, school bus hipster told the Times reporter he doesn’t “really do well in a work environment.” Then the Facing Homelessness enabler guy chimed in to claim “he’s got anxiety in his world that makes it difficult navigating societal expectations.”

    So, there you go. Just tell them you have severe allergic reactions to work and responsibilities, and tell them you’re basically an infant who is unable to take care of yourself and need the government to support you… and VOILA! You’re good to go in Freeattle.

    • Because the homeless are just like hipsters in a school bus. Spoken like a trust fund baby who’s never had to know where his next meal came from.

  7. Have they figured out where they’ll get all this money they’re drooling over, when the levy pushes thousands of jobs out of Seattle? Or is this just like the sugared drink tax where they think people will just mindlessly keep on buying/paying it? Counting chickens, much?

  8. I’m hoping someone(s) in the business community could help me with the math on this. If companies “with taxable gross receipts in Seattle of less than $20 million” won’t be affected, how far of a reach into small businesses will this tax have? for instance, would owning 2 restaurants put a company in or near that bracket? 3% of local businesses does not seem like a large amount but I’m open to being educated.

  9. Hold on just a minute. Before we go all in explaining how this tax will work, why don’t we revisit the conversation if it’s needed at all. Two highly regarded consultants came to the same conclusion several years ago—we don’t need to spend more money, we just need to support the programs that actually work. Until the question of needing more money is answered, it’s irresponsible to start adding new taxes. Let’s hold our elected officials accountable.

  10. What the graphic fails to recognize is that the majority of the “deeply affordable” housing is actually permanent supportive housing, which is the type of housing needed for a large majority of those facing homelessness in Seattle.

    I suggest reading the actual proposed legislation, and complete spending plan here:

    As someone who works in these services, I know that this bill would significantly help the cause. Just funding shelter beds is great, but that doesn’t get them out of homelessness. We have to continue to build housing (that the population can be successful in) to fix the problem.

  11. Seattle already has the most regressive tax system in the country, and in a place where the cost of living sky rockets. This is an attempt to even out the playing field.

  12. I wish that was correct, but in fact this proposal funds construction of 1780 units. 445 are PSH. 735 are not even 0 to 30% AMI, so certainly no homeless person will live in those.

    And the constraint on PSH is not units (most communities do scatter site PSH with rental vouchers, not dedicated new construction – because that is hugely expensive and takes the better part of a decade) but operating and services dollars. The first PSH operating and services dollars do not even come online for years.

    Just think about that. 445 PSH units and 300-ish shelter beds for $75 million a year. That’s more than $100,000 a year per unit. More than $500K per unit for the first five years.

  13. Before anything else- I think all of you should go and actually read the legislation, because this article doesn’t cover near enough about it, and it would answer questions about what’s allocated where. As for why this isn’t a tax on all, we already have a regressive tax system, and the hours tax is something that doesn’t put a direct hit on Seattle workers. It may seem like a lot of money, but when it’s compared to what these company’s income actually is, it’s a tiny little sliver, they wouldn’t even really notice.

    I think all of you who think that Seattle just hands out “freebies” to those with disabilities, chronic illness, and people experiencing homelessness need to spend some time in the shoes of those who are actually dealing with these issues. Yes, there are people who will take advantage of the system, but the number of people who actually need these services far outweighs the number of people who manipulate the system. You’re always going to have weird van-living hippies, but that doesn’t take away from a problem that is real, and terrible.

    As for living in a nicer apartment in government housing? First, it’s going to take a few months for you to apply for the housing. Then, even though it’ll take years for you to pop up on the wait list, you have to check in every month or you lose your spot in line. That being said, very low and no-income apartments are terrible. You have frightening neighbors in bad neighborhoods, a lot of them are falling apart, infested, or barely a room and a window. What’s even worse, is that most of us who work (60+ hours a week, by the way) for these agencies providing these services qualify for the same services we’re trying to refer our clients to for low-income housing. We need more affordable housing, that’s just a fact.

    If these folks were able to work, the idea of creating more jobs would be great. It would be ideal! But the majority of the homeless population in Seattle is dealing with major mental illness, or other chronic illnesses and disabilities. You can accuse them of faking all you want, but spend some time with these folks, please. If they could hold down jobs and live independently, most of them definitely would, but even when they’re medicated they can’t manage to have appropriate social interactions. Not to mention that you cannot afford to live in Seattle on anything close to minimum wage. A living wage in Seattle is about $72,000. Working a full time, minimum wage jobs you earn less than $30,000 a year. When rent for your average MICRO-studio is $1,000, well, I’ll just leave that there.

    Again, there are some people who try to work the system, but we’re (mostly) good at our jobs, and we can usually weed them out pretty quickly, they’re not going to to get the services that matter. They might get to use the showers, and get a bed, but they’re not going to get housed. If they get as far as receiving SSDI, it’s not nearly enough to live on (can anyone live on $954/month in Seattle? That’s the top end of disability payments), and you lose it if you work more than 15 hours a week, which brings you to $1800/month, which is still hard to live on in Seattle. It’s what I make, it sucks.

    I personally have done a lot of research into this idea of an hours tax. I have friends that were on the committee that proposed this legislation, and I am for it. But no one is saying that this money is the be-all-end-all solution to homelessness. The problem we have right now is real, and if this doesn’t pass, those beds they mention? They’re not new- they’re current beds. Without this funding they’re closing on June 1st. We’re doing the best we can to prepare the clients for them to close, but after the RFP funding-reallocation in November, a significant amount of shelter beds have already been lost, NOT passing this tax would just exacerbate an already increasing crisis. Plus, the more affordable (and supportive) housing we create, the closer we get to solving the homelessness crisis. This is a method that’s proven to work across the country on large scales, and it’s proven to work right here in our own backyard (the housing first movement was pioneered right here in our own Pioneer Square!) We just don’t have enough of it.

    I don’t know anything about consultants coming in to evaluate the situation (I do remember it, but off the top of my head I can’t remember what they said), but I know that our agency needs more money to function, at current levels, and to continue (and even increase what we do/how many folks we house), we need more money. I know other agencies are hurting as well. If this is how we get it, that’s great. If reallocation is done at the city level to find us the money, that’d be great too. Either way, money needs to be spent.

    The comment you made about “quid pro quo” dealings between social services and city council members, I found offensive. We’re citizens of Seattle, just like you, and we’re exercising our right to participate in the democratic process. It’s not like we’re stopping you from volunteering and door knocking for the people that you support. We’re going to support the council members who advocate for our jobs and our clients, presumably as you would for those who believe in the things that you do. That’s just logic. If you don’t like that we turn out more volunteers, do something about it. Get up and go recruit volunteers for the candidates you like. No one tells us we have to because they gave our agency money. We do it because we believe in them (or at least that they’re the better option.)

  14. @movingon – I don’t think that you understand everything that goes into PSH. With the construction of the building, and everything that happens in a PSH setting, $100k a year per resident actually doesn’t sound like enough. PSH provides everything from meals and utilities, to health-care on-site. In addition to this, people in PSH are here for a reason, and sh*t happens – sometimes literally. The amount of money PSH spends each year on building maintenance is incredible. I mean, I work in PSH, and I have a resident who just filled their toilet up with feces, and when that was full, filled up the bathtub, because it never even occurred to him to flush the toilet. Not to mention the constant pest treatments (residents often can’t/don’t shower themselves, and refuse assistance), three meals a day, etc.

  15. I didn’t say the cost of PSH are too high, I said there’s not enough of it and the rest of the money will not go to help homeless people. But you’re probably right and the PSH projects are probably not fully funded. Which just makes it worse.

    The average cost of operating services for a PSH unit nationwide is about 15K. Locally it’s probably more like 35K, but I think that includes the rental voucher. Assuming local average operating and services costs, how many units of PSH could we fund if we dedicated 80% of this tax to scattered site PSH?

    What if we split it three ways, between PSH operating and services, two year rental subsidies, and shelter? How many homeless people would benefit compared to this plan?

  16. If this money is truly earmarked to keep low performing shelters open then that is horrifying. I can only hope that the money will go to a different agency.

    What the consultants said was the we should disinvest in programs that don’t work and fund what does work. That we should use stop funding things like encampments, tent cities, hygiene centers, and overnight-only shelters. That we should separate the affordable housing crisis from homeless response.

    What does this tax fund? Encampments, tent cities, hygiene centers, overnight-only shelters, and capital development for low income housing that will never house homeless people. Oh, and 445 units of PSH. Thank God DESC is so politically well connected or it probably wouldn’t even have that.

  17. “It may seem like a lot of money, but when it’s compared to what these company’s income actually is, it’s a tiny little sliver, they wouldn’t even really notice.” Spoken by a person with no understanding about how businesses work, and where they choose to base their businesses. Raise their costs and they will move. Then where will our city be when suddenly all those people leave? Property values plummet. Property taxes cut in half. Short sighted. By the way, the reports by the two consultants is discussed in this article from Danny Westneat:

    • Thank you. Our city council all failed econ 101. They assume businesses aren’t subject to competition just because they aren’t. But in reality, raise businesses’ costs and they have to raise prices (or relocate). Actually, I’d love to treat our city gov’t like businesses get treated. Unhappy with the product – don’t buy it. How about we all withhold property and sales tax from the City of Seattle until they start doing work worthy of being paid for? Because right now they are just passing taxes on everything – sugar, headcount, etc – to raise more revenue to piss away. Just wait, rainfall tax is coming…

      • Right. The city council failed econ 101. Which is why Seattle is such a successful city. And no, you can’t run a government like a business. You can’t fire your citizens for being mentally ill and homeless, though the heartless Republicans that infest this state would love to pack them into trains and send them off to camps. As for withholding taxes, try it and see what happens. All this right wing whining about funding is from the same people who whined about $15/hour minimum wage. It didn’t destroy the economy then and this won’t now. You’d think business would be happy to do something in order to keep the homeless from the sidewalks in front of their businesses. But no, they’d rather fight any human improvement tooth and nail as they put on MAGA hats and pat themselves on the back for what great Christians they are.

  18. Crosscut just ran an opinion piece by a local small business partner on this issue:
    Regarding larger businesses packing up and leaving–I haven’t witnessed the positives outweighing the negatives of them being here. An economy that booms too quickly leaves a lot of folks in the dust. Just my perspective.

  19. The comments are a lot more informative and useful on that Crosscut opinion piece than the essay itself.

    If you want a city with no large companies and no jobs, there are plenty of them scattered across the rust belt. I’m sure you could live for cheap in any one of them.

    Only in socialist Seattle can you find people actually complaining about too many jobs. Talk about the epitome of a First World problem!!

  20. @neighbor… don’t you think that sounds more than a little bit like sour grapes? If I’m not getting some, then no one should?

  21. A mix of businesses large and small is great for a city. But a huge and rapid influx of high earners can lead to growing pains such as a lack of affordable housing. Impact fees on the larger corporations can help. It seems there can be a middle ground here with reasonable conversation rather than binary thinking and assumptions. It’s possible to be comfortable and still have thoughts about the impact of large corporations on a city. How about we keep the dialogue open and productive?

  22. Why doesn’t this mention funding for a Safe Consumption Site in Seattle? The Seattle Times reported that Deborah Juarez wrote a memo to the Task Force asking why there was funding used for this purpose?

  23. because it’s an article about a proposed tax to address homelessness, not a post addressing safe injection sites.