LOCAL NEWS

Sawant sends message to Olympia ahead of hearing on big business tax

Feb 27, 2020, 12:33 PM
Kshama Sawant, Tax Amazon...
Kshama Sawant detailing her plan to tax Seattle's big businesses. (KIRO 7)
(KIRO 7)

Will King County get to tax big business to tackle homelessness, and would that block efforts from Kshama Sawant to tax Amazon in Seattle?

Sawant details expansive plan to tax Amazon, other Seattle businesses

Those are the burning questions heading into a House Finance committee hearing in Olympia on Thursday afternoon.

The original proposal to give King County the authority to enact a tax on businesses with workers earning over $150,000, and raising about $121 million a year to address homelessness, died when it failed to get a vote before a key deadline last week.

The sponsors, Rep. Nicole Macri and Rep. Larry Springer dropped a new version less than a day later.

Businesses like Amazon, Starbucks, and Expedia support the idea in concept, but have been locked in negotiations over the bill for weeks with lawmakers, labor groups, Seattle, and other cities.

“Negotiations have been ongoing for close to two weeks, they were making significant progress; [they] hadn’t solved all of the problems but several of them had been addressed, so we were inching closer to an agreement [and] we ran out of time,” Springer said after the original bill died.

The new bill tasks the state Employment Security Department with administering the tax, confirming a company’s gross receipts, the number of employees, and how much they earn.

The state auditor also has a role. Both have state budget implications which skirts the legislative deadline issue, so lawmakers essentially have until the last day of session – March 12 – to pass the bill.

Springer says talks have led to agreements in several areas so far, including allocation of the tax revenue, who gets how much, what the money can be used for, and who administers the tax.

“Where there is not agreement yet is how many businesses are in – what’s the criteria for inclusion? What’s the amount – the tax rate — and is there preemption?” Springer said.

Preemption would ban cities from enacting their own separate business tax in the future, blocking proposals like Seattle City Councilmember Kshama Sawant’s Amazon tax.

The Seattle City Council sent a letter to Olympia weeks ago to share its unanimous opposition to adding any future ban to the bill.

Seattle council has ‘deep concerns’ with possible ban on business taxes

Sawant has gone even further, with supporters heading to Olympia to stress that point in person. That’s come alongside multiple public calls for lawmakers to go on record with where they stand on the preemption issue.

“We need all progressive Democrats at the state Legislature to stand publicly against preemption and say that they will not accept any ban,” Sawant said earlier this month, as she revealed details about her Tax Amazon proposal.

On Wednesday, she went even further, sending a letter with a personal plea to the Democratic Chair of the House Finance Committee that will hear the bill Thursday.

“I urge you, as a Democratic state legislator, to join the growing number of city, county, and state elected representatives who publicly support taxing big business to address the unprecedented housing unaffordability and homelessness crisis in our city and state, and to oppose any ban or ‘preemption’ by the state Legislature to limit municipalities from enacting these taxes,” Sawant said in the letter.

She went on to stress the importance of keeping that taxing authority with cities, especially with the proposed bill only expected to raise a little over $150-million a year, far less than the amount reportedly needed, as detailed by a recent McKinsey report.

“It’s a very sticky topic. Of course the business community says that if we’re going to pay this large tax bite we don’t want cities piling on afterwards with additional taxes. Cities say we want to retain the ability to raise our own taxes if we want to, so that’s the run right now that we’re trying to work out,” said Springer.

The new bill – at least in its current form — ups the tax rate from a range of 0.1% to 0.2% in the original bill to 0.25%. That could raise more money to invest in housing and homeless services than the original, especially with bonding, but the rate is not set in stone at this point.

Small businesses would be exempt from the tax, but there are lingering questions about what qualifies as a small business.

“Right now the threshold is more than 50 employees and gross receipts of $3 million or more,” Springer explained. “So if you have a company with 80 employees but you don’t gross $3 million you’re out. If you are company that grosses $3 million or more and you have fewer than 50 employees and more than half of them make the $150,000 then you’re in. So, it’s a complicated formula.”

Springer says the biggest sticking point to getting this across the finish line is definitely preemption. While it is not in the new bill right now, it is likely to resurface in the discussion. He hopes Thursday’s hearing offers more clarity.

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Sawant sends message to Olympia ahead of hearing on big business tax