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Rob McKenna: Olympia has power to kill Seattle’s head tax

Groups for and against Seattle's head tax rally at Seattle City Hall May 9, 2018. (Matt Pitman, KIRO Radio)

Seattle Mayor Jenny Durkan signed Seattle’s new head tax into law on Wednesday, but state lawmakers may try to kill it in the Legislature.

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“The City of Seattle would rely on its general taxing authority over businesses to impose this tax; it’s a kind of excise tax,” former state Attorney General Rob McKenna told KIRO Radio’s Dave Ross. “They probably have authority to impose it under that general taxing authority related to their police power to license businesses. It’s something they have tried to bring their income tax under, but it really fails for the income tax. It probably works for the head tax.”

“However, the Legislature could take it away from them by specifically prohibiting certain kinds of taxes, like a head tax if it chooses to do so,” he added.

That’s what State Senator Mark Schoesler aims to do. He believes that state law can be clarified within the next legislative session to prevent Seattle from imposing its head tax. He has already drafted a bill.

“The city’s taxing authority, as Senator Schoelser observes, all comes from the state,” McKenna said. “The state can taketh away just as it giveth.”

McKenna notes that Sen. Schoelser is a Republican in the Senate, which is the minority party by one vote. The House has a two-Democrat majority. The senator will have to get some Democrats to come over to his side, which might not be that difficult. Democratic Sen. Mark Mullet has already been vocal about his opposition to Seattle’s head tax.

“I wouldn’t bet against it,” McKenna said. “It’s probably about 50/50 right now. The way they are going to position this in the Legislature, is that if you don’t vote for it, you are effectively supporting a head tax. There are procedural ways to avoid creating that embarrassment for legislators – you simply never allow it to come up for a vote.”

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In the meantime, the head tax could still affect the region’s economy while the city prepares for implementation.

“This head tax is on top of the other taxes (the city) charges,” McKenna said. “They also want the income tax, they want higher property taxes. It’s beginning to make this place look a lot less attractive to business because of the cost of doing business here … it definitely can discourage new businesses from locating here, or businesses expanding here. After all, they don’t have to go very far to get away from Seattle’s policies. They can move north, south, or across the lake as many companies are already doing, including Amazon, which is adding more jobs on the Eastside.”

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