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Facing opposition from mayor and chamber advocates, Seattle tax on big businesses for COVID-19 relief and housing moves toward May vote

Measures to tax big business accelerated by the COVID-19 pandemic took another preliminary step at the Seattle City Council Wednesday as a torn cohort of public commenters weighed in on the suite of bills.

Proponents of the legislation criticized Mayor Jenny Durkan for opposing the tax and touted its ability to address multiple issues at once, while opponents called it a “tax on jobs” and claimed it could stunt response to the outbreak that has sickened more than 6,000 in King County.

“We are on the eve of a major economic downturn and instead of negotiating over new streams of revenue for city programs, we need our city leaders help and focus on getting our local jobs and economy back online,” said Don Blakeney, the Downtown Seattle Association’s vice president of advocacy and economic development.

The plan, spearheaded by council members Kshama Sawant and Tammy Morales, would, in the long run, tax the largest 2% of businesses to fund the construction of up to 10,000 units of social housing and the conversion of homes to environmental standards in line with the Green New Deal starting next year.

But Sawant and Morales have pushed the plan forward to also create a $500 a month Seattle COVID-19 relief payment program for up to 100,000 households beginning later this year.

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The program would prioritize assistance to “seniors; those that are undocumented, immigrants, and refugees; individuals experiencing homelessness; working people who have lost incomes and become destitute as a result of the pandemic; and, others who experience structural or institutional barriers to accessing support from the government.”

The spending plan includes starting the relief effort by borrowing $200 million from other city programs:

“We are currently experiencing multiple crises: a pandemic, economic downturn, and climate change,” Emily Hazelton, a data analyst with a local healthcare organization and a volunteer with 350 Seattle, said, noting she thinks this legislation could tackle all three of these issues at once.

Another speaker said the bill isn’t a “tax on jobs, it is a tax that creates green jobs.” Other proponents noted the jump in Amazon’s stock since March as evidence it is benefitting from the pandemic.

In an opinion piece in The Seattle Times on Apr. 20, council member Alex Pedersen called it “job-killing” and the “Bellevue Relocation Act.” One commenter in the hearing Wednesday argued the entities being taxed would be those working most to respond to the pandemic and would hamper the region’s response.

The businesses subject to the tax would be those with annual payrolls exceeding $7 million and would be taxed 1.3%, with non-profits, grocery stores, and public employers getting exemptions. This totals about 800 businesses that would be taxed, or about 2% of the nearly 40,000 operating in Seattle, according to 2018 data.

If passed, the tax would go into effect in June of this year, but payments — over $286 million for 2020 — would not be due until February 2022. Beginning in 2022, the tax would raise $500 million annually.

The emergency payments of $500 each month for four months to up to 100,000 households would be funded through borrowing from other existing city funds. The money could be tapped from the voter-approved Families Education and Preschool Promise, Move Seattle, or the 2019 Library levy funds, for example. The total loan amount from the six sources available cannot exceed $200 million.

Meanwhile, the Tax Amazon group formed to push for the new tax announced it was filing to hold a ballot initiative on the tax “in order to fund social housing and a Green New Deal” this fall.

In 2018, the city council passed and then rolled back a $275 per full-time employee tax on companies reporting $20 million or greater in annual “taxable gross receipts.” That tax would have generated about $50 million annually.

Sawant lost the first battle for the new legislation’s passage as it was sent to the Select Budget Committee chaired by council member Teresa Mosqueda, instead of the District 3 council member’s Sustainability and Renters’ Rights Committee earlier this month.

Sawant told CHS in an interview earlier this month that the legislation would get a committee vote in mid-May. It would eventually need three-fourths of the council to approve the legislation and the mayor’s signature to go into effect. “There is no scenario under which people would receive checks this year,” Durkan recently told KING5. “That is never going to happen, and I think it’s irresponsible for anyone to say that that’s even possible.” (UPDATE: CHS has updated this quote to include the mayor’s full statement at the request of the mayor’s office.)

Starting May 1st, meanwhile, Sawant and tenant advocates have called for a “rent strike” in support of renters struggling to pay rent through the crisis.

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30 thoughts on “Facing opposition from mayor and chamber advocates, Seattle tax on big businesses for COVID-19 relief and housing moves toward May vote” -- All CHS Comments are held for moderation before publishing

  1. I’m all for these companies paying fair taxes, which I don’t think they do. And the federal government appears to just be printing money right now. But treating local businesses as piggy banks to go get money from all the time like a piggy bank to raid seems mid evil, just close the existing tax loopholes.

  2. There might be more support for this tax if the revenues were directed to the city’s general fund instead of being earmarked for a few very specific projects. I’d rather see the city bring in the revenue that it needs to operate and then, based on total revenues, allocate funds between must-have services and infrastructure vs this or that feel-good project of the moment.

  3. There’s been a lot of focus on the revenue side here, but the spending plan is equally flawed.

    The bulk of the spending goes towards city owned “social housing.” And the plan spends $400M per year towards it, but by year 10 we only have 10,800 units. So it adds about 1,000 units per year.

    Alternatively, you could provide a rent subsidy of $1,500 a month for 22,000 people in year 1. But Sawant and crew don’t want to go that route because the money gets paid to the “greedy landlords.” Their “social housing” experiment is more important than actually helping people.

    • not defending either, but sawant’s proposal adds supply; your alternative adds demand; each has different effects on the overall market.

      Also, the amount works out to 370k/unit, which is at least in the ballpark, especially if some of the units are for families.

    • And never a penny towards “sustainability” for people– to foster job training and programs to help people move towards supporting themselves. Just keep feeding and housing people forever and paying for it. The problem with that is the funding money is forever at risk of disappearing, leaving people as dependent as they were to begin with. Still unable to support themselves. For any solution to work it has to include the full circle. But the Clowncil consistently wants to just keep feeding and housing people without funding anything that helps them work towards self-sufficiency. Eventually doomed to fail.

      • Jim, what’s unsustainable is an economy that asks people to work low-wage jobs, then gives them no place they can afford to live.

        inequitable land use policies are complicit. You can’t artificially restrict housing and land use on one hand, then argue that using non-market means to provide housing and help correct those same distortions is incoherent.

        You can’t have it both ways. Either we’re less restrictive about land use and allow housing costs to come down via market means, or we solve the problem in other ways. This is one of those other ways.

        The alternative—a seattle that’s increasingly only for the wealthy and that sentences lower-wage workers to unhealthily long commutes, which cause poor physical and mental health—is not a place I want to be part of.

      • both of those things are unsustainable. The problems are not caused by only one thing. Even if you had far less-restrictive land use policies, making housing much less expensive, homeless people with no jobs, no healthcare, no mental heathcare, no shelter, no income wouldn’t be able to pay rent that was even 75% lower. You can’t just address a symptom of homelessness without looking at all the causes, and expect anything to change. That’s all Seattle seems to do.

    • City government green lit every aspect of the recent tech boom and just gave soundbites in response to all the problems it has caused for over half the people who work in this city, have family and career roots here, let alone the communities of color who have seen many displaced out of the region. Little fringe pet experiments are not going to reverse this mess they gave a green light to all along..

      • So, what you’re suggesting is “they never did anything right before, so why bother doing anything now?”. That’s a great plan.
        Or do you just want to bitch?

  4. Like comedy, politics is all about timing. So it surprises me that Sawant — a politican and a comedian — seems to have missed this one so badly.

  5. Sawant and Morales are opportunistically trying to pass this tax by playing on people’s emotions during the pandemic…i.e. the urge to help those affected by what’s happening. But the tax is permanent, and will be in place long after the pandemic is over. Unemployment insurance, the federal add-on of $2400/month, and the stimulus check are more than enough help for those who have been laid off.

    And the $500/month payment to a large number of citizens? That’s just payola to get support for their proposal.

    • Thank God a retired boomer in his all knowing wisdom proclaimed those that were laid off have more than enough to get by. We all feel so much better. Thanks pawpaw bob

      • I am not a boomer, but I feel Boomers and Generation Xr’s have failed in on thing for sure. That is raising their children to respect their elders who made a lot of sacrifices in their lives for the younger generations. One day we will all be elderly, and I think some of us will have a rude awaking. Boomers fought for the Civil Rights movement, Peace instead of the Vietnam War, Gay Rights, and a lot more. Nobody is perfect, and this includes Millennials and Generation Z. The Boomers who are still alive did not live this long by being dumb. When Boomers are long gone, will the younger generation blame you for all the worlds ills?

      • Sara, you are an ageist. Feel good about that?

        Thanks to all who have called Sara out on her derogatory comments.

    • Btw the federal add-on is $1200/month per person not $2400/month. Way to inflate the numbers to suite your narrative. Why do you always do this pawpaw Bob? A retiree really has no business telling active members of the work force that are still paying rent they are getting enough. Absolutely tone deaf comment.

      • you know what else is tonedeaf? The childish tendency of so many know-it-alls to condescendingly dismiss ANYTHING anyone older has to say with “OK boomer”. You think it’s cute, it only makes you look like a pud.

      • How is $600/week in federal subsidized unemployment not equal to $2,400/month? 4weeks/mo * $600/week subsidy = $2,400/mo. See article linked below.

        Now, per the article it does show that for Washington State on-average that $600/week federal unemployment subsidy added to the range of state unemployment benefits, works out to somewhere in the 90 ~ 100% range of income replacement while it is in effect (the graphic does not give an exact number).

      • Hey Sara/Sasha,

        Wondering when you where going to hop back on here after your sock puppet coming out party last month.

        As B in the CD points out, there’s a $600 federal unemployment add-on to weekly claims. With Washington’s minimum $188 payment, anyone who’s currently receiving unemployment benefits will receive *at least* $788 payments (~$700 after tax withholding) a week.

        Prolly should get your facts in check before you start acting all petty with your personal attacks.

  6. Brian N. You should address your comment to the person you’re having your little tiff with because I have no idea what your talking about, you sound like an absolute lunatic. If someone hurt your feefees I can assure you I’m not that person. Sara is a pretty common name just like yours.

      • LOL? Are you 12? This place is absolutely toxic with trolls. My point being some people only got the stimulus and can’t get unemployment because they own their own business. These replies assume everyone is qualified for and receiving unemployment which they are not.

      • No Sasha, we’re simply calling you out for saying that people collecting unemployment insurance don’t get an extra $2400 a month from the Federal government.

        On an aside: When you come in flaming, calling people “boomer” and “pawpaw”, then expect to get flamed back.

  7. While that’s true for some it’s not true for everyone. Making it seem like it is is massaging the facts. Some people are getting nothing. How does it feel to be devoid of empathy? How does it feel to be a keyboard warrior “flamming” people?

    • Are these rhetorical questions that you’re asking yourself? 🙄

      I’d venture to say nearly all of us posting on here are sympathetic to the challenges that our most vulnerable communities are facing. Just because we don’t agree with your preferred proposed solution doesn’t make us un-empathetic.

      And correcting your misstatement most certainly doesn’t mean we’re un-empathetic.

      • That’s laughable. You and your little troll posse are some of the most unsympathetic small minded people I’ve ever encountered. I didn’t correct anything just explained it better to you more simply so you could comprehend. Go back to mynorthwest.

      • So many ways I could go but I’ll leave it at this: calling people “boomer”, “pawpaw”, “small minded” and other derogatory comments is about as Trump-arian as you can get and does nothing but discredit your arguments.

        Come at it with a more constructive angle if you’re wanting folks to understand your POV…. otherwise, by all means keep trollin’, just expect to reap what you sow.

  8. We need a budget to get us thru pandemic and the mayor is not leading on this issue, creating a vacuum – and this sloppy ideologically-driven bill is what we get to fill that vacuum.. There are ways to raise an emergency tax without hurting our local businesses – amazon yes, tom Douglas no. And there are much smarter ways to spend the money, for instance many of our small businesses are in peril of bankruptcy.

    Ps never mind Svetlana

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