Seattle Payroll Tax Passes Full Council

Annie ChanUncategorized

On July 6, the Seattle City Council passed Jump Start Seattle, Councilmember Teresa Mosqueda’s payroll tax legislation, by a vote of 7-2. Councilmember Debora Juarez voted no and urged a public vote; Councilmember Alex Pedersen voted no and raised concerns about lost jobs.

As amended, the tax will raise $214 million per year.

With seven votes, the final package is veto-proof.

Here are the key points of the package voted out of committee:

  1. Seattle businesses with less than $7 million in payroll are exempt from the tax. Grocery stores, government entities, and business not subject to city taxation under federal or Washington state laws are also exempt.
  2. The tax will be imposed beginning January 1, 2021.
  3. Today, a middle-tier of payroll was added and the tax rate was increased on the highest payrolls/high earners to 2.4% (from 2.1%).
    • Payrolls ranging from $7 million to $99.9 million:
      • Compensation of $150,000 to $399,000 will be taxed at a rate of 0.7%
      • Compensation of $400,000 and above will be taxed at a rate of 1.7%
    • Payrolls ranging from $100 million to $999.9 million:
      • Compensation of $150,000 to $399,000 will be taxed at a rate of 0.7%
      • Compensation of $400,000 and above will be taxed at a rate of 1.9%
    • Payrolls greater than $1 billion:
      • Compensation of $150,000 to $399,000 will be taxed at a rate of 1.4%
      • Compensation of $400,000 and above will be taxed at a rate of 2.4%
  4. The tax will sunset in 20 years. Additionally, language remains that was added stating the Council’s intent to monitor proposals for taxes imposed by King County or the State of Washington and to consider future amendments to the City’s payroll tax so as not to subject Seattle businesses to double-taxation.

The Council will finalize a spending plan for the new revenue in the coming weeks.

Seattle King County REALTORS® has been engaged on this issue since April. The Association joined businesses and organizations across Seattle in signing a community letter to local leaders opposing Councilmember Sawant’s job tax proposal and calling for a focus on Seattle’s economic recovery. The Association also engaged members to sign petitions and stay informed about the issue in an April News Center article.