Seattle businesses send message to city council on taxes

Apr 19, 2018, 6:05 AM | Updated: 8:31 am

If there was one cohesive message from Seattle businesses to the city council, it’s that they want to be part of homelessness solutions. They have little, if anything, left to give the city, however.

RELATED: Why business communities outside Seattle love the city council

“We do not perceive it is your intent to knock us out and restrict us in any way, you’re saying ‘we’ve got a problem to solve and you guys need to be part of the solution,'” said Dan Black with Zeek’s Pizza.

But Black said there will be consequences if Seattle passes a new tax on Seattle businesses. The city is currently considering a head tax on employers, among other revenue options. All the businesses at a council committee meeting Wednesday argued a similar point: taxes and regulations in Seattle have become so steep, they are struggling to survive. Many conveyed that they believe the head tax is already a “done deal.”

You can watch the three hour meeting here.

Black was surprised his company was lumped in with the likes of Amazon. Both would qualify for the proposed head tax because his company makes more than the $10 million officials are considering as the threshold.

“I coach my kid’s little league team and Jeff Bezos is trying to colonize space,” Black said. “There’s a big difference between the two businesses.”

Black was among one of five panels addressing the council, including retail; tech; hospitality; life sciences and non-profits; manufacturing and industrial. Some panelists said that if the council had to implement a tax, they preferred a payroll tax, not a head tax.

Voices of Seattle businesses

While there were larger companies such as Vulcan, Safeway, and PEMCO present, much of the commentary came from small Seattle businesses.

Destiny Sund, The Confectional at Pike Place Market (specializes in cheesecakes)

In 2017, we profited just over $3,000 … This quarter, we lost $20,000. It’s been our worst quarter to date … If we have another year like we did last year and we add this tax on top of it – I would just like to the opportunity to remain in businesses and to support the homeless crisis in the way that we do best. Which is through donations and the ability to offer a job … Sometimes when I’m driving around delivering cheesecakes, it feels that this city doesn’t care if my business goes away.

Sarah Osborne – Safeway

Our biggest focus is hunger, for obvious reasons. We know there is a huge food insecurity issue in this state, and especially in this city … the cost of living is so high, people have much less money for food … I’m here out of concern of this tax passing, for food retailers, and that tax being passed on to consumers and increasing the cost of eating for a lot of people and making their lives even more difficult. We are pretty confident that is what retailers will do … We did, in fact, absorb the increase in minimum wage, for that reason our profit margin in Seattle is half as much as other places. So we are kind of backed up against the wall and there is no other place to absorb further expenses, unless it is passed on.

Gail Stringer, Hawaii General Store – Wallingford

I get to pay the tax at my work then I get to go home and try to fix dinner and pay the tax again when I go to buy groceries. It’s going to hit small business owners double … So small businesses are paying double there. We are getting taxed to death. We sort of feel like we are the giving tree. We’ll pluck this apple, we’ll pluck this apple. We feel that with this tax, it’s the last apple on the tree. We’re just exhausted. I think the reason you don’t hear more from the small business community is because we are going 100 miles per hour just to keep our heads above water.

Sal Spady – Cre8tive Empowerment

I’d like all of us to realize that we did a soda tax with the perspective that soda is bad for you, so we tax the soda and have less. If we do a jobs tax, we are probably deciding that jobs are bad for you and we’d like less jobs. So when you say to Safeway that you just need to not collect any more profit margin and keep your groceries cheap and they give millions of dollars of groceries to our homeless community, we are possibly telling Safeway to decide between helping their community and being able to pay their employees … and city hall, I think you guys are aligned with us. We are looking for a safe city where everyone has a place to stay. We just need to work together to do it instead of doing it in a draconian manner.

City council responds

Councilmember Mike O’Brien pressed Spady on his assertion that a head tax will hurt jobs in Seattle. O’Brien argues that not every tax is a sin tax, such as sales and property taxes.

“A per soda tax decreases the amount of soda sold; a per jobs tax will decrease the number of jobs offered in the city,” Spady responded. “And to approach that from your perspective and not see some similarity is discouraging … I understand your goal is not to discourage jobs, but every business owner reaches a point.”

RELATED: Seattle council considers new head tax

Councilmember Kshama Sawant didn’t fully attend the meeting, but she did spend her short time there to shut down any arguments against the new business taxes. While Sawant opposes a proposed fee on all companies — referred to as the “skin in the game” fee — she favors a head tax on large Seattle businesses.

Sawant argued that the Washington Technology Industry Association — one of the panelists — is chiefly funded by large corporations such as Comcast, Facebook, Verizon, Microsoft, and Amazon. Even as the panelists got up from their chairs to leave the room, she took to the mic to say that Albertsons — which owns Safeway — ranks third on Forbes America’s largest private companies list and therefore, it’s not struggling.

“Are you saying the companies on Forbes’ list are not profitable? Come on,” she said. “Let’s have a reasonable argument here.”

Sawant also singled out Spady with Cre8tive Empowerment and his argument that more taxes will lead to fewer jobs.

“Where is the evidence that you have seen?” Sawant pressed Spady. “It’s really important for us to be serious about facts. When we were fighting for a $15 an hour minimum wage, some of the same businesses that were opposed to this tax were saying at that time that it would lead to job losses and all kinds of apocalyptic scenarios. And none of them came to fruition.”

“As an economist, I’d like to know if you have evidence, or are you just making assertions,” Sawant said.

Sawant left before Steve Hooper’s panel. He wished she was there to hear him. Hooper is with Kigo Kitchen, a growing restaurant chain that has yet to be profitable in Seattle. He points to an infamous study out of the University of Washington. That study found Seattle’s rising minimum wage resulted in fewer hours and jobs for employees. It is sometimes referred to as the “Jacob Vigdor study” after one of the researchers.

“We’re living the Jacob Vigdor study in our restaurant chain,” Hooper said. “When we started four years ago, we had 13 people working lunch. Today we have nine. That is the Vigdor study. What was 60 hours of work to serve 250 people is now 45 hours of work … It’s because we’re business people and we solve problems. And one of the problems that you presented us with is ‘do more with less.’ So we’ve done that.”

“This is straws on the camel’s back,” he said. “Will this be the straw that knocks over my business? Probably not. Maybe for Destiny and maybe for other small businesses like ours. The question is really one of threshold. You continue to layer things on and it gets harder and harder to make the whole thing make sense.”

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