Seattle’s small businesses say plan to tax employers is ‘poorly timed and dangerous’

SEATTLE — Earlier this month, Councilmembers Kshama Sawant and Tammy Morales proposed accelerating legislation taxing big businesses to generate $200 million in emergency funds to help people struggling during the coronavirus pandemic.

The councilmembers introduced three pieces of legislation that would tax the top 2% of businesses as measured by the size of their corporate payroll.

The tax was originally introduced March 4 to take effect Jan 1, 2021, but the accelerated proposal would instead take effect June 1, 2020.

As the pandemic continues to have a serious impact on the local economy, the timing of the plan could hurt smaller businesses.

The Downtown Seattle Association set out a letter to businesses for signatures this week. The letter is urging Seattle Mayor Jenny Durkan and City Councilmembers about how the plan is poorly timed and dangerous.

Read the letter below:

Dear Mayor Jenny Durkan and City Councilmembers,

We are writing today to implore you to take a responsible approach to our region’s economy as we pivot to economic recovery once our Stay Home, Stay Healthy efforts begin drawing down. The introduction of a new tax on jobs at this period of heightened economic fragility could harm the livelihoods of those of us in the business community that have dedicated our professional lives to creating companies that serve our community and our employees.

Daily reports on COVID-19 indicate a flattening curve of infection as our collective social distancing and stay-at-home practices reduce the number of interactions that spread the disease. Unfortunately, those practices have also decimated the region’s economy, producing unprecedented spikes in unemployment and a growing list of businesses that will be closing their doors for good. At this time when jobs are needed more than ever, the last thing our leaders should be doing is promoting policies that threaten employers.

Councilmember Sawant’s proposed new tax on Seattle jobs is poorly timed and dangerous on many levels. Not only would it be the largest single tax increase in Seattle’s history and 10 times larger than 2018’s failed head tax proposal, it comes at a time when we’re starting to see unemployment hit double digits locally. The proposal targets more than 800 of the city’s employers who are responsible for over half of all jobs in Seattle. But the impacts won’t stop there.

This tax would create a ripple effect of harm on Seattle, threatening those with the least margin for injury – Seattle’s small businesses. The negative impacts caused by such a measure would far outstrip the revenue it would produce at a time when our priority should be securing aid from the state and federal government. This type of ill-conceived tax policy will delay our recovery, further deepening city revenue shortfalls. The quickest way to improve our economy and solve the city’s financial situation is to get people back to work.

In order to get jobs growing to rebuild the city’s revenue stream, we suggest these priorities for action:

• Invest in our public works to improve infrastructure and stimulate the building industry.
• Grant targeted regulatory relief that will reduce operating costs for small businesses and speed the opening of Main Street businesses.
• Expedite building permits to stimulate housing starts and small business improvements.
• Control the budget to ensure limited tax dollars produce the most benefit for those in need and a robust economic recovery.
• Increase public safety to restore public confidence and reduce losses to small businesses from theft and public nuisance.
• Empower our neighborhood small business districts with grant support and increased collaboration on recovery.
• Provide utility rate relief by freezing rates and establishing payment plans for delinquent accounts.

As a city, we took on containment and mitigation of COVID-19 by accepting our collective responsibility to stay home and distance socially. In the weeks ahead, we must also accept the economic recovery of this region as a collective responsibility requiring the highest levels of collaboration and coordination.

We are ready to partner with our elected officials so that jobs are growing and revenue is flowing. We urge you not to derail our recovery with punitive policies. Let’s work together to promote a strong and swift economic recovery for all.

Sincerely,

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