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Seattle approves plan for big business tax spending plan including COVID-19 economic relief

The City Council passed legislation Monday that will shape how Seattle spends the money generated by its new “progressive revenue” tax on big businesses.

Monday’s votes approved $86 million in spending from Seattle’s emergency reserves on new economic relief for residents and small businesses during the COVID-19 economic crisis and signed-off on a $200 million a year plan to create new affordable housing across the city including funds specified to address displacement in the Central District.

“With a new progressive revenue and a detailed spending plan that prioritizes food security for low-income families, Green New Deal policies, small business support, and new resources for our homeless neighbors and immigrant and refugee community, we are ready to truly JumpStart Seattle’s economy by ensuring our most vulnerable residents are not left behind during this pandemic and we build a more resilient economy as we recover,” council budget chair Teresa Mosqueda said about the plan.

“Past recessions have proven that when governments invest in small business, housing and food assistance, and support our most vulnerable – instead of imposing cuts and austerity – local economies can weather crises in a more equitable way, and local economies rebound faster.”

In the council’s announcement on the passages, the statement said the COVID-19 Relief Bill “centers our community’s immediate needs as a result of this pandemic and economic crisis by investing $86 million back into the community” that includes “a COVID relief fund for small businesses weathering an unprecedented COVID recession, expansion of food vouchers to help those struggling to feed their families, rental assistance and funding to de-intensify the city’s shelter space, and support for our immigrant and refugee neighbors, many of whom have been denied state and federal COVID relief because of their immigrant status.”

The council says 15% of the spending is earmarked for small business assistance and worker training, including funding for equitable economic recovery prioritizing small business support, ensuring a just transition for workers and centering the city’s equity values.

“I believe we should have a state-wide income tax, unfortunately until the state legislature fixes our regressive sales tax system, Seattle must move on its own, Gay Gilmore of Capitol Hill’s Optimism Brewery said in the council’s statement on the spending plans. “JumpStart contains the sunset provision for when the state legislature moves, I support it. Seattle will lead and this tax will turn every business hit by it into an ally for moving the state to income tax. An austerity budget would be devastating to our city in this crisis.”

CHS reported here on the approval earlier this month of the new business tax. Beginning January 1st, Seattle companies with payrolls $7 million and up will be taxed on pay to employees making more than $150,000 per year. The tax rate ranges from 0.7% to 2.4% with tiers for various payroll and salary amounts. It is expected to generate more than $200 million a year for for a city facing a massive COVID-19 crisis-ripped hole in its budget forecasts and in desperate need of revenue for hoped expansion of housing, business assistance, and community spending. Late amendments approved include an expanded 20-year sunset clause that puts the tax in place for two decades. Grocery businesses and independent contractors are exempt.

As part of the plans approved Monday, the council approved Kshama Sawant’s proposal calling for at least $18 million year in the new tax spending plan to fund construction of new affordable housing in the Central District.

Mayor Jenny Durkan says she opposes the tax and the spending plans which are set to become law without her approval.

The GSBA business group expressed tempered support for the effort and said a survey of its members showed 60% supported “the City raising new revenue to deal with the COVID-19 crisis and housing crisis” and  “a plurality supported the JumpStart plans specifically.”

“While we are disappointed that funding to small businesses and nonprofits was not always kept at levels we urged, the efforts funded in both these bills will provide real, concrete help as we work through this unprecedented economic crisis,” the organization’s statement on the approvals reads. “The needs in our city are immediate and significant, and these efforts will help make a difference.”

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