Holding Leaders Accountable for Recovery

By: Markham McIntyre Posted: 07/13/2020

We are committed to continuing to advocate for an approach that sets our region up for a stable and inclusive future.

On July 6, the Seattle City Council passed the final version of the payroll tax, 7-2, with Councilmembers Debora Juarez and Alex Pedersen voting no. The Council also approved multiple amendments, including a sunset after 20 years and a limited deduction for non-profit healthcare providers for 3 years.

The City will start assessing this tax in 2021 and will start collecting it in 2022. A quick reminder of which businesses with employees in Seattle qualify for this tax, and the rates they will pay:

The tax applies to businesses with a Seattle payroll expense of more than $7M annually

  • Compensation is considered to be paid in Seattle if any of these criteria are met:
    • An employee is primarily assigned in Seattle
    • The employee is not primarily assigned anywhere and performs 50% or more of their service in Seattle
    • The employee is not primarily assigned anywhere, the employee did not perform 50% or more of their service anywhere, and the employee resides in Seattle
  • For businesses with Seattle payrolls of $7M to $99.9M:
    • No tax on salaries under $150,000
    • .7% tax on salaries of $150,000-$399,999
    • 1.7% on salaries over $400,000
  • For businesses with Seattle payroll between $100M and $999.9M:
    • No tax on salaries under $150,000
    • .7% tax on salaries of $150,000-$399,999
    • 1.9% tax on salaries over $400,000
  • For businesses with Seattle payrolls of $1B or more:
    • No tax on salaries under $150,000
    • 1.4% tax on salaries between $150,000 to $399,999
    • 2.4% tax on salaries over $400,000

This week, Council will consider a resolution that details how they plan to spend the new revenue. Since the payroll tax does not go into effect until 2021, City Council also has a bill that would use the city’s reserve funds (the Rainy Day Fund and the Emergency Fund) for immediate spending. City Council will be discussing both pieces of legislation in Budget Committee on Wednesday and potentially taking a Committee vote.

The Chamber released the following statement following last week’s vote: “Today’s new payroll tax pins Seattle’s economic future on local businesses remaining strong, at a time when the depth and breadth of this crisis is still unfolding. All of our leaders should be thinking day and night about how to get businesses back open and people back to work safely. Instead, the Council turned immediately to new revenue and passed one of the largest tax increases in Seattle’s history. With that comes even more responsibility to demonstrate how they are using the city’s resources to deliver on critical services and get Seattle on track for an equitable and inclusive recovery,” said Alicia Teel, our senior vice president of public affairs and communications.

As a business advocate, the bottom line is that policies need to make our region more economically competitive, equitable, and resilient. Proposals should not jeopardize economic recovery, and we are committed to continuing to advocate for an approach that sets our region up for a stable and inclusive future.