$50 million tax on jobs is approved by Seattle City Council

(Seattle, May 14, 2018) This afternoon, the Seattle City Council voted unanimously in favor of taxing jobs at businesses with more than $20 million in annual taxable gross receipts in Seattle. This new revenue will be added to existing city spending on affordable housing and homelessness.

The legislation, passed in a 9-to-0 vote, differs in several significant ways from the bill passed out of Finance & Neighborhoods Committee on Friday. The tax will raise $50 million annually through a $275 tax per FTE at businesses above the revenue threshold. The original council proposal was to raise $75 million through a $500/FTE tax. The final legislation also includes a sunset clause which will end the tax in 2023.

As we’ve said from day one, taxing jobs is bad public policy that will ultimately fall heaviest on labor-intensive businesses like hospitality. The tax will hurt the economic vitality of our city and hurt the ability of hospitality businesses to provide low barrier employment and second chance jobs that help people gain skills and financial stability.

Jobs in hospitality are part of the solution to homelessness, and we are disappointed the City Council has chosen to tax these jobs. However, we appreciate Mayor Durkan’s leadership in ensuring that the final legislation includes a sunset date and additional oversight. We will be watching closely to ensure there is accountability and that this additional spending delivers results.

What you need to know about the tax on jobs established today:

The tax on jobs will raise an estimated $50 million/year by taxing for-profit businesses with annual gross receipts in Seattle of more than $20 million.

The tax rate will be $0.14323 per employee hour or a flat rate of $275 per FTE. Businesses will have an option of paying the flat rate or calculating the tax based on employee hours.

There will be no shift to a payroll tax as proposed in the original legislation.

The tax goes into effect on Jan.1, 2019.

The tax sunsets after five years on Dec. 31, 2023.

Here are some of the ways SHA and members advocated against the tax on jobs:

Council should partner on job growth, not a job-killing head tax (Op Ed in The Seattle Times, 5/11/18)

May 8 Letter to City Councilmembers

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