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Seattle Chamber of Commerce files lawsuit against city over big business tax

Dec 8, 2020, 4:12 PM | Updated: 4:22 pm
Head tax, Big business tax...
(Matt Pitman, KIRO Radio)
(Matt Pitman, KIRO Radio)

The Seattle Metropolitan Chamber of Commerce is filing a lawsuit against the city, stemming from a big business tax passed by Seattle City Council in July.

Seattle council passes landmark big business tax proposal

Known as the JumpStart Seattle tax, it is expected to raise over $200 million a year by levying a tax on corporations with payrolls over $7 million. Qualifying businesses will be taxed 0.7% for every employee making over $150,000, and 1.4% for employees making over $500,000.

The Chamber of Commerce is alleging in its lawsuit that the tax violates the Washington state constitution, and that it conflicts with the right of state residents to earn a living wage.

In practice, the JumpStart tax is levied directly on qualifying businesses, and does not come out of employee salaries.

Local business organizations have been outspoken against the tax since it passed, claiming that it will drive companies like Amazon out of Seattle and into the arms of more business-friendly cities.

“This tax that the council passed affects not just Amazon, but nearly 800 companies in Seattle,” Downtown Seattle Association Jon Scholes said in August. “We think there’s many more that are going to suggest that they’re looking for locations outside of the city if the council leaves this tax on the books.”

Sawant: Amazon tax ‘only thing’ that can rescue Seattle economy

That played out less than two months after the tax was approved, when Amazon announced that it would update its Bellevue expansion plans to include an additional 10,000 jobs and a $1 million grant to the Eastside city’s Human Services Fund.

If a judge does decide to overturn the Jump Start tax, there could be wide-ranging implications, given that funds from the tax were widely incorporated into Seattle’s recently-approved 2021 budget to account for COVID-19 relief money and homeless response efforts.

In the near term, it borrows from the city’s emergency and general funds, and then will pay that back with interest when the tax begins to collect money in 2022.

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Seattle Chamber of Commerce files lawsuit against city over big business tax