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June 12 2018

Seattle Reverses Job-Killing Head Tax on Big Employers After Residents Speak Out

by Patrice Lee Onwuka

Seattle residents don't want the city to place a tax on every worker at a large company – like Amazon and Starbucks – even if it's to fund affordable housing and homeless services. Instead, some think the city ought to spend current resources more effectively. 

In a win for workers and employers, Seattle's Mayor and City Council have done an about-face on a job-killing corporate tax

Just last month they voted for a new "head tax" on every worker at a large company in the city. Employers would pay $275 per worker to the city annually, netting about $47 million annually.

Businesses were in an uproar and joined with citizens to form the No Tax on Jobs Coalition. The group hit the streets to collect 18,000 signatures by this Thursday for a petition that would put the tax to a referendum in November. They’ve collected 45,000 signatures in support so far.

The people have spoken and city leaders had no choice but to listen.

In a Seattle Times Editorial, editors take city leaders to task:

Repealing the tax on jobs is the right thing for Seattle. The ill-conceived measure would cause major harm to the city’s business climate and reduce job opportunities, while doing relatively little to end homelessness.

Durkan and the council now have much work ahead to restore public trust. Credibility, not money, is what City Hall needs at this point.

That includes trust in the council’s word.

Less than a month ago, council members insisted the jobs tax was a moral imperative. They ignored warnings from past mayors, other elected officials, the business community and other concerned parties and unanimously approved the tax May 14, to take effect in 2019.

Seattle and King County also must build trust in the effectiveness of their well-funded homelessness programs before seeking more revenue.

A major reason the head tax was opposed outside City Hall is because the public is tired of spending so much on the homeless crisis and seeing little overall improvement and accountability.

Major city leaders across the country looking to Seattle for guidance on how to soak successful companies in their limits in order to fund policy priorities from homelessness to education ought to learn this lesson: increasing taxes is not the solution.

Raising taxes on businesses damages the business environment by creating a disincentive for companies to move there while incentivizing employers to lay off workers or forgo hiring new employees. 

Furthermore, it's a lazy policy solution that allows policymakers to avoid accountability for their stewardship of public resources. Instead of ensuring they are spending current resources wisely, they can just keep cashing the blank check that taxpayers give the city for greater amounts.

Homelessness is a problem in Seattle in part because housing is so costly. However, as the editorial board notes, the region spends $200 million on a year on the issue, including $70 million from Seattle alone and that amount has doubled. It’s time to assess the strategies in place to figure out what is working and nix what is not.

The last thing city leaders should do though is to keep throwing tax money after ineffective solutions.

 

Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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