SEATTLE, Wash. — Seattle’s tax collections have grown far faster than the city’s population, employment, and inflation over the past decade, according to a new economic analysis warning that the city’s increasing reliance on businesses could create challenges for its future tax base.
The analysis, commissioned by the Downtown Seattle Association (DSA) and Seattle Metro Chamber and prepared by independent economic consulting firm ECONorthwest, found Seattle taxes increased 172% between 2013 and 2025.
That compares with 31% population growth, 23% employment growth and 50% inflation during the same period.
The report comes as business leaders raise concerns about whether Seattle can continue increasing taxes on employers without making it harder to attract and retain businesses, jobs and investment.
“Seattle has experienced tremendous growth over the past decade, and this analysis gives us a clearer picture of how the city’s tax system has grown and changed along with it,” DSA President and CEO Jon Scholes said. “What stands out is the widening gap between tax growth and growth in jobs and population, along with an increasing reliance on businesses for city revenue. At a time when Seattle is working to grow jobs and attract investment, understanding those dynamics is essential to our economic future.”
The analysis estimates businesses will account for about 66% of Seattle’s city tax collections in 2026, up from roughly 55% in 2016.
That shift accelerated after the city adopted its payroll expense tax in 2021 and continued with the voter-approved social housing tax in 2025 and an increase in the Seattle Shield business and occupation tax in 2026.
Scholes warned that additional taxes on employers could ultimately shrink the city’s tax base if businesses respond by reducing their Seattle operations, jobs, or investment.
Seattle’s newer taxes rely on a small number of businesses
Seattle Metro Chamber President and CEO Joe Nguyen said the city needs to focus on getting better results from the money it already collects rather than continually looking for new revenue.
“Seattle’s tax collections are growing far faster than its population, jobs, or inflation. Employers are carrying more of that burden. That trajectory is not sustainable,” Nguyen said. “The question cannot always be how to collect more money. It must be how to deliver better results with the money we already have and build a tax structure that helps our economy grow.”
The analysis also found Seattle’s newer taxes rely heavily on a relatively small number of businesses.
Less than 500 companies pay the payroll expense tax, while about 220 pay the social housing tax. The report estimates 75% of payroll expense tax revenue comes from 10 companies. Seattle’s Office of Economic and Revenue Forecasts reported that the 10 largest payers accounted for 73% of payroll expense tax revenue in 2025.
The report said the city’s tax mix has also changed substantially. Property, sales, business and occupation and utility taxes, identified as Seattle’s “core” taxes, accounted for about 83% of city tax revenue in 2013. By 2026, that share had fallen to 52%.
Voters have also approved $5.2 billion in property tax lid lifts, bond levies and Transportation Benefit District taxes between 2013 and 2026. Those revenues support services including libraries, affordable housing, preschool, transportation and capital projects.
The analysis calculates that Seattle collected about $2,300 in city taxes per Seattle employee in 2025, compared with about $940 per resident, after adjusting for inflation. The report cautions that those figures should not be interpreted as taxes directly paid by individual workers or residents.
The findings come as Seattle continues to grapple with slow employment growth and office vacancy, even as downtown has seen increases in visitation, residential population and public safety, according to a separate Downtown Seattle Association report released last month.
Seattle’s tax system has changed dramatically, economist says
ECONorthwest Partner and Senior Policy Adviser Morgan Shook said the analysis shows how dramatically Seattle’s revenue system has changed over the past decade.
“The share of revenue coming from core taxes has declined, new taxes have added significant revenue, and businesses now account for an estimated two-thirds of city tax collections,” Shook said.
The Downtown Seattle Association supported Mayor Katie Wilson’s current budget proposal because it does not increase existing employer taxes.
But Scholes said the city is at an inflection point, with an increasing share of its tax revenue coming from a relatively small number of companies that can choose where to locate and expand.
The report was originally prepared for the DSA and Chamber in 2023 and updated in September 2026. ECONorthwest said its analysis relies on Seattle budget documents, city revenue forecasts, Washington Department of Revenue data, King County Assessor information, and other government sources.
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This story was originally published on MyNorthwest.com.