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Employee hours tax 2.0: Seattle restarts business tax effort

Jan 8, 2018, 6:29 AM

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Seattle passed a head tax on the city's largest employers like Amazon in May 2018. (AP)

(AP)

Seattle’s last attempt at a business tax may have failed in 2017, but its successor is already being drafted at city hall.

A new task force is developing Seattle’s employee hours tax 2.0.

“As it was written last year, it was somewhat of a knee-jerk legislation,” said Ian Eisenberg. “I’m glad the city decided to take a breath and study it a little bit more and draft it a bit better.”

RELATED: Council gets contentious over business tax

Eisenberg owns and operates Seattle’s most successful pot shopUncle Ike’s. He is on the new 16-member task force; one of three members with business ties. The group is expected to develop a report for the council by early March, identifying potential revenue sources — including an employee hours tax aka a head tax. The money will fund homelessness and housing programs. It has a goal of reaching between $25 million and $75 million in revenue.

“The (previous) tax was sold to the public as a tax on the largest and most prosperous businesses in the city,” Eisenberg said. “I run a small business; a small, family business … and the idea that we are one of the largest businesses like Amazon or Microsoft was just ludicrous. I think it was a matter of it being put together so quickly; nobody at the city had time to really study who was being affected by the tax and what the ramifications were.”

According to the task force’s documents, the city requests the executive office and council conduct a stakeholder engagement process:

The outcome of the engagement process would be a broadly supported recommendation for an on-going revenue source that the City could collect beginning in 2019, with the understanding that such ongoing revenue would be used to address the affordability and homelessness crisis in Seattle and the displacement of low-income residents.

Employee hours tax task force

The previous tax attempt proposed a few ideas, such as charging employers 5 cents per hour, per employee, or as much $125 per employee. It would have affected about 1,100 Seattle companies that earn more than $10 million annually.

After the first attempt at a head tax failed in 2017, the council passed a resolution promising to form the task force currently underway. Council chairs are Councilmembers Lorena Gonzalez and Lisa Herbold. Community co-chairs are Tony To and Kirsten Harris-Talley. Harris-Talley was a temporary council member sitting in for Tim Burgess during the last budget cycle when the first head tax was rejected.

“Mainly, it’s a lot of service organizations that would eventually get some of the money,” Eisenberg said of the task force. “There’s a construction company on it that builds a lot of affordable housing. They and myself are about the only business interests on the committee.”

RELATED: Incoming Mayor Durkan hit by tax she opposed

Three members of the task force, including Eisenberg, are listed as members of the business community.

  • Councilmember M. Lorena González, Co-Chair
  • Councilmember Lisa A. Herbold, Co-Chair
  • Jennifer Adams, Lived Experience of Homelessness
  • Andrew Coak, Labor Representative
  • Lisa Daugaard, Subject Matter Expert
  • Ian Eisenberg, Business Representative
  • Samantha Grad, Labor Representative
  • Kirsten Harris-Talley, Community Co-Chair
  • Katie B. Wilson, Subject Matter Expert
  • Brianna Little, Service Provider
  • Daniel K. Malone, Housing/Service Provider
  • Tom Mathews, Business Representative
  • Fernando Mejia-Ledesma, Business Representative
  • Courtney O’Toole, Lived Experience of Homelessness
  • Tony To, Community Co-Chair
  • Maiko Winkler-Chin, Housing Provider

“I was a critic of the last administration, that they didn’t always have any small business input,” Eisenberg said. “The city asked who wanted to be on the committee and I applied. And I think I’m the only actual business person that would be affected by the tax, as opposed to recipients of the funds. It’s kind of hard to complain the city doesn’t want business input when no business persons apply to be on committees and panels, so I decided to step up and not just talk, but actually do something.”

The task force will meet twice a month on Thursdays through the beginning of March. The first meeting on Jan. 4 was largely a meet-and-greet for members to set objectives and a timeline.

“It was really just ground rules and schedules, so nothing really happened so far,” Eisenberg said.

A current timeline for the task force has the group slated to finalize a report for the city council by March 1. In the meantime, the group will discuss the potential employee hours tax; any burden created by new taxes and comparing them to businesses outside the city; alternative revenue sources; and spending priorities.

Other taxes

This is not the first time Seattle has considered or passed an employee hours tax. In 2007, a $25 per full-time employee tax was passed to fund transportation projects. That tax produced: $4.7 million in 2008; and $5.6 million in 2009. The tax was repealed after 2.5 years.

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Employee hours tax 2.0: Seattle restarts business tax effort