Seattle City Councilmember Teresa Mosqueda unveiled a proposal to tax large corporations Tuesday, becoming the latest local leader to seek new revenue as City Hall grapples with a longstanding homelessness crisis, an ongoing coronavirus emergency and urgent Black Lives Matter protests.
Mosqueda says her plan — which would target giant companies with many highly paid employees, such as Amazon — could underwrite $86 million in coronavirus relief this year, buttress city services as Seattle emerges from the pandemic in 2021 and raise as much as $200 million a year in the long term for affordable housing, business assistance and community development.
The plan has some business and labor movement interest that could bolster its chances of passing, with Expedia hailing Mosqueda’s approach to negotiations and several unions voicing support. Similar proposals have been under discussion for months. Mosqueda is calling her version “JumpStart Seattle.”
“Our community is hurting. Our economy is tanking,” the citywide council member said at a video news conference. “We cannot wait for the feds or the state to step in. We have to act now to help Seattle.”
Not all business leaders are on board. In a statement Tuesday, the Downtown Seattle Association said: “We continue to believe taxing jobs is bad public policy, and it’s especially ill-advised as we enter what is likely a deep recession and an unprecedented rise in unemployment.”
Early this year, Mayor Jenny Durkan helped craft a bill for the state House of Representatives that would have allowed King County to tax corporations’ pay to employees making at least $150,000 a year, excluding businesses with 50 or fewer employees, to fund affordable housing and homeless services.
The idea was to raise money at the county level to undergird a countywide response to homelessness. But the bill died after some companies sought a clause preventing Seattle from piling on with its own big-business tax.
Then, Councilmembers Kshama Sawant and Tammy Morales pitched Seattle legislation that would tax companies’ pay to all employees, excluding businesses with annual payrolls of less than $7 million, to fund affordable housing and green-infrastructure programs. They said that could raise as much as $500 million a year.
When the coronavirus hit, Sawant and Morales suggested the city could borrow money from certain levy funds to provide households with coronavirus relief immediately and could repay those loans later on with the new tax revenue. No other council members have signed on to their plan, which Durkan has opposed.
Now, Mosqueda is pushing her own concept, which blends the other proposals, according to materials provided by her office. Mosqueda’s plan would tax businesses’ pay to employees making at least $150,000 a year, excluding companies with payrolls of less than $7 million.
In the short term, revenue raised by Mosqueda’s tax would be used to help people survive and avoid homelessness, help immigrants pay their bills, help small businesses recover from the coronavirus crisis and help struggling households pay rent and buy groceries. Undocumented immigrants are particularly vulnerable right now because they can’t access certain benefits, a representative from the advocacy organization OneAmerica said a Mosqueda’s news conference.
In the long term, affordable housing would be the main use for Mosqueda’s tax. That makes sense, because the economic consequences of the pandemic could push more people onto the streets, Sara Rankin, director of the Homeless Rights Advocacy Project at Seattle University, said at the news conference.
“Housing is essential to our collective public health,” Rankin said.
Mosqueda’s tax wouldn’t start to be billed until 2021. Under her proposal, the city would initially tap its emergency reserves to provide $86 million in coronavirus relief this year and would replenish those reserves later on with some of the new tax revenue.
Durkan has talked about possibly needing to dip into those same emergency reserves to close a City Hall budget gap opened up this year by the coronavirus economic shutdown, which has decimated sales tax collections.
The mayor has not yet reviewed Mosqueda’s plan, but is committed to working with federal, state and city lawmakers and with community leaders “to identify new, progressive revenue sources to invest directly in our communities,” Durkan spokeswoman Kelsey Nyland said in a statement.
Mosqueda’s tax would raise less money than the Sawant-Morales plan while perhaps targeting Amazon more directly. Amazon didn’t immediately comment Tuesday.
Under Mosqueda’s proposal, companies with annual payrolls between $7 million and $1 billion would be taxed at a rate of 0.7% (1.4% for pay to employees making at least $500,000 a year). But for companies with annual payrolls of more than $1 billion, the rate would be 1.4% (2.1% for employees making at least $500,000 a year).
Representatives from Expedia and Ethan Stowell Restaurants joined Mosqueda for her news conference Tuesday. So did representatives for unionized supermarket workers, home health workers and iron workers, demonstrating labor movement support.
“Expedia Group supports the inclusive and collaborative process that got us to this point. We plan to stay engaged as the conversation continues but have not endorsed the bill at this time,” Richard de Sam Lazaro, who handles local government affairs for the travel company, said in a statement.
Steve Hooper, president of chef Ethan Stowell’s local restaurant group, described Mosqueda’s proposal as better than the Sawant-Morales plan because companies’ pay to lower-wage employees, such as service workers, wouldn’t be taxed. City Hall should be encouraging restaurants shut down by the pandemic to rehire as many employees as possible, he said.
Mosqueda agreed, saying her plan is aimed at thriving companies with highly paid employees able to work from home during the coronavirus crisis, rather than the brick-and-mortar businesses that have been hardest hit. For instance, the shopify websites could be run and managed by employees from their homes.
Representatives for OneAmerica, which advocates for immigrants, and the Housing Development Consortium, which lobbies for affordable-housing developers, also participated in the news conference.
Multiple speakers praised Mosqueda for meeting with numerous stakeholders as she worked on her plan; she said her office had about 100 meetings.
Mosqueda’s tax would sunset after 10 years — or earlier if a similar tax is passed at the county, regional or state level. Lazaro pointed to that clause as key. Expedia backed the House bill that would have paved the way for a county tax.
Mosqueda chairs the council’s budget committee, which is scheduled to meet Wednesday.
Seattle passed an income tax on high-earning households in 2017 but that was struck down in court. A ruling in that case may allow the city to adopt a 1% income tax on all households and Durkan has expressed interest in that.
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