Seattle City Council Proposes a Progressive Tax on Business

Task Force Co-Chairs González, Herbold Explain Details of Legislation Intended to Help Seattle Structurally Address Homelessness

 

Seattle, WA — Following more than four months of deliberation and stakeholder engagement, Council introduced legislation and a companion spending plan resolution today outlining the details of a progressive tax on business, which would generate additional revenue necessary to further address homelessness and housing affordability in Seattle.

The legislation and resolution are the combined result of initial work conducted by members of the Progressive Revenue Task Force.  Earlier this year, Councilmembers M. Lorena González (Pos. 9 – Citywide) and Lisa Herbold (Dist. 1 – West Seattle & South Park) convened the Task Force intended to identify progressive sources of revenue to assist people who are experiencing homelessness or at high risk of becoming homeless.  

About 29,000 Seattle households earning less than 50 percent of the area median income are paying more than 50 percent of their income in rent and utilities. Recognizing that housing affordability is a key component in the complex causes of homelessness, the legislation, released today, will address the homelessness emergency by creating more affordable housing.

The Progressive Tax on Business will:

  • Exempt Seattle’s small and medium-sized businesses, only applying to those with at least $20 million or more annually in taxable gross receipts as measured under the City’s existing Business & Occupation tax;
  • Applies only to the City’s approximately 500 largest businesses (or approximately 3% of Seattle’s business owners);
  • Large businesses included will pay just about a quarter ($0.26) per hour per employee working in Seattle;
  • All nonprofit businesses in Seattle are exempt;
  • The employee hours tax will be replaced by a business payroll tax on January 1, 2021;
  • For those same approximately 500 largest businesses, the replacement business payroll tax will be calculated as 0.7 percent of all payroll related to work done in Seattle.

About 75% of the revenue generated will be allocated to the Office of Housing and used to fund the additional construction of deeply affordable housing units; and, 20% of the revenue generated will be allocated to the Human Services Department to purchase critical direct services, such as emergency and temporary shelter services for people experiencing homelessness.  This additional revenue will allow the City to build an additional estimated 1,780 housing units during the next five years while also funding additional basic services to nearly 100 households living in their cars; enhance public health by expanding hygiene centers and expanding citywide sanitation and garbage service; create 100 tiny homes at sanctioned encampments; and add 362 more shelter beds.

“In 2017, our city-funded programs exited 3,400 people from homelessness into permanent housing. Yet, we continue to see people living and sleeping in public spaces. The causes for homelessness are varied but the result is the same: unsheltered people are unable to find their way into affordable housing because it does not exist at the needed scale,” said González, chair of the Gender Equity, Safe Communities, New Americans and Education Committee.“ The answer to our homelessness crisis is not as simple as being austere and shuffling existing budget priorities. There is no question that additional resources are needed to fund housing and services that are working. This new revenue is targeted towards building deeply affordable housing and funding services that allow a person to become healthy, stable and independent.”

“Since the homelessness civil emergency was declared, no additional federal funds have been provided. The federal government isn’t going to solve the crisis of 4,000 people sleeping outdoors on our streets, in vehicles, and in our parks,” said Herbold, chair of the Civil Rights, Utilities, Economic Development, and Arts committee. “The structural cause of homelessness in high cost cities like Seattle is that there is a growing unmet need for more affordable housing created when new workers, earning new high wage jobs, and low income workers are in competition for limited housing.  Lower income workers lose out and the result of the explosive growth Seattle is experiencing has increased homelessness. A progressive tax on businesses most benefiting from this growth is our best option because we already rely heavily upon regressive property and sales taxes that hit everyone equally. Homelessness is a regional problem and one that extends beyond our City’s limits. As our partners in combating a crisis, we look forward to One Table’s recommendations and fully expect the County and others to engage in addressing it, too.”

“This is a common sense solution to a public health crisis. We’ve seen an uptick in our neighbors experiencing homelessness and housing insecurity and the impact that it has on our entire community. This progressive revenue stream balances the needs of our small business community, while ensuring we have the funding we need to provide critical housing and health services,” said Councilmember Teresa Mosqueda, Pos. 8 – Citywide and chair of the Housing, Health, Energy and Workers Rights committee. “With more and more people coming to Seattle each day, and rents skyrocketing, this approach will help make sure that everyone in Seattle will have the opportunity to call a place a home.”

“Seattle’s small businesses, about 97 percent of all businesses in the city, will not be taxed by this proposal. Just the opposite, this proposal does much of what many small businesses want to see in responding to the crisis – create more safe and appropriate places for people to go, said Councilmember Mike O’Brien, District 6, Northwest Seattle, who introduced a similar measure last year. “Local government provides services and housing to thousands of people experiencing homelessness each year, but the need is growing faster than we can keep pace. With this investment, we will jumpstart a regional and sustained approach to homelessness that will make a difference for our unsheltered population, and our businesses.”

The Council is set to continue deliberation on the Council bill and resolution in the following manner:

  • Monday, April 23 Introduction of Legislation
  • Wednesday, April 25 Finance Committee Meeting 2:00 p.m. Discussion of Investments
  • Wednesday, May 2 Special Finance Committee Meeting 12:00 p.m. Issue Identification
  • Wednesday, May 9 Finance Committee Meeting 2:00 p.m. Discussion of Amendments, Possible VOTE

The Full Council vote is scheduled to occur on Monday, May 14 at 2:00 p.m.  The legislation will take effect in January 2019.

View an infographic about the Progressive Tax on Business, thumbnails below:

 

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