Seattle City Council approves payroll tax on largest, best-paying companies

Vote comes about two years after the city was forced to scrap a head tax amid push back from businesses

The Seattle City Council on Monday approved a tax on the city’s highest-paid employees, working at its largest employers – just a couple of years after an unsuccessful attempt to impose a head tax.

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In a 7-2 vote, the council agreed to move ahead with the “JumpStart Seattle” plan, which would be applied to businesses with $7 million or more in annual payroll. An assessment would not be placed on salaries below $150,000.

The tax would range from 0.7 percent to 2.4 percent.

“This carefully crafted revenue proposal is thoughtful in its requirement that only the largest companies, with the highest salaries, pay the tax and it ensures predictability for businesses if there is a regional or state payroll assessment in the future,” the city council wrote in a news release.

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The council estimates the measure would raise $214 million per year. Those funds would be used to invest in housing security, food security, the homelessness crisis and cash assistance to small businesses.

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AMZNAMAZON.COM INC.3,167.46-57.54-1.78%
SBUXSTARBUCKS CORPORATION75.79+0.13+0.17%

This isn’t the first time Seattle has tried to raise revenue by taxing its largest employers.

The city came close to implementing a head tax in 2018, which was set at $275 per employee annually (on companies that make more than $20 million in revenue). While unanimously approved by the city council, the measure was met with staunch resistance from local businesses, including Amazon and Starbucks. Amazon said it would reconsider projects in the city if the measure went into effect.

Ultimately, Seattle did not follow through with the policy.

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Spokespeople for Amazon and Starbucks did not immediately return FOX Business’ request for comment on the JumpStart Seattle plan.

However, cities and states are dealing with ballooning budget holes from coronavirus-related lockdown measures, which caused large swaths of the U.S. economy to shut down for months.

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As previously reported by FOX Business, San Francisco is looking to hike taxes on its highest-earning business leaders under a proposal that could be put on the local ballot in November.

The city’s Board of Supervisors moved to submit an additional gross receipts tax, or an administrative office tax, on businesses with a compensation ratio in excess of 100:1 for the highest-paid employee to the median employee salary. The tax has been dubbed the “Overpaid Executive Gross Receipts Tax Ordinance.”

Executive compensation would take into account things like wages, salaries, bonuses and commissions.

Meanwhile, lawmakers in the Golden State are considering coronavirus relief legislation that includes a head tax on the state’s big businesses.

No other state has a head tax.

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