Some legislators eye Seattle’s job tax for statewide application

Some legislators eye Seattle’s job tax for statewide application

Members of the State Legislature are proposing a statewide tax on high-paying jobs after the Seattle City Council last week passed a new payroll tax on large, well-paying employers.

The JumpStart Seattle proposal passed by a veto-proof 7-2 vote in the Seattle City Council earlier this month. It taxes big earners and the companies that employ. Employers with more than a $7 million annual payroll will be charged a percentage based on how many people they employ at the $150,000 salary mark or above. The tax rate will range from 0.7% to 2.4%, depending on individual salaries and overall payroll. The Seattle Times has more detail and analysis.

The $200 million-per-year tax is much larger than the 2018 plan for a $47 million-per-year tax that the city council passed then hastily repealed under a threatened citizen referendum.

Meanwhile, Sen. Reuven Carlyle, D-Seattle, suggested expanding it to a statewide version of the tax. Carlyle tweeted, “With the #waleg facing a $8.8B deficit, a state-level payroll tax is a viable, measured, progressive option to help protect vital services & balance the budget. A city tax is the wrong level of government. It’s easily avoided as downtown jobs explore how, whether & where to return.”

Rep. Nicole Macri, D-Seattle, said she is looking at doing exactly that in 2021.

“Conversations are happening now,” she said. “There is now talk about an array of progressive tax measures that could help both address some of the revenue shortfalls facing the state as well as addressing increased needs of Washingtonians related to the COVID crisis.”

She sees the statewide tax in light of a $9 billion shortfall in revenue the state had expected to collect.

When that shortfall was announced last month, Sen. John Braun, R-Centralia, noted that the state’s tax collections are still going up. Tax revenue will increase — not by as much as had been hoped and expected, but the state’s tax revenues are not going down, Braun said.

“The next biennium still projects more revenue than this biennium,” Braun said during last month’s Economic and Revenue Forecast Council meeting. “We’re still growing. Not at the rate we’ve been accustomed to, but we’re still growing. If we passed the 2019 budget, which by all accounts was a very robust budget, we would still be pretty close to balancing in the next biennium. This is a big problem, but not a problem it would be wise to use additional taxes to solve.”

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