CEO of Downtown Association calls head tax bad public policy

There appears to be growing support within the Seattle City Council to charge a head tax on large businesses.

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A proposed bill released Friday would tax businesses earning $20 million or more a year — some 500 in all — 26 cents per employee hour. An estimated $75 million would be raised to tackle homelessness and the affordable housing issues, according to the Progressive Revenue Task Force.

Those in favor of the tax argue big businesses driving the city’s economic boom and attracting high-wage employees are also driving up the cost of housing, pushing people out of their homes. According to a recent report, approximately 3 percent of businesses would be taxed.

Jon Scholes, the CEO and president of the Downtown Seattle Association, calls it bad public policy.

“I thought it was bad public policy when they first proposed it last fall and still think so today,” he told KIRO Radio’s Dave Ross.

The council rejected the original head tax effort with a 5-4 vote last year. That would have raised $25 million a year.

Councilmember Kshama Sawant, who warned people not to listen to the rhetoric from businesses that would be impacted by the tax, wanted the city to double down on the original tax.

Scholes says the council’s approach to a head tax is backward. He points out that leaders from Seattle, King County, and homeless service agencies have been working toward a solution. However, the city council does not appear willing to wait for any kind of recommendation. The council is “rushing” to tax jobs and businesses within the city.

“If spending were the only thing keeping us from solving the issue of homelessness in the city, we would have addressed it long ago,” he added.

According to the current legislation, the head tax would go into effect in 2019 and continue through 2020. Beginning Jan. 1, 2021, the head tax would be replaced by a payroll tax.

The Finance and Neighborhoods Committee will hold one public hearing Monday, April 23, on the proposed legislation.