Seattle business owner calls 900% tax bump a ‘money-grab’

The City of Seattle wants to expand its police force and will do so through a restructuring of taxes specifically aimed at businesses. And for at least one small Seattle business, that means a 900-percent tax bump.

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Brothers Bob and Jack Toepfer, who own a small construction company called Toepfer General Contractors in Phinney Ridge, were among the many Seattle businesses who received notice last month of a business license tax certificate increase. While many likely did not see a major change, Toepfer’s annual license tax went from $110 to $1,000 per year.

The pair reached out to KIRO Radio’s Dori Monson to vent their disapproval of the tax bump, which they said “blindsided” them and other nearby businesses. The brothers said they wished the city would have informed them sooner of the increase so that he could have gathered signatures in opposition.

“I look at this as like the money-grab of the Seattle City Council,” he said. “I don’t see this as a Democracy in the city anymore, and I see this as kind of a tyrannical reign of this council and this mayor.”

Goal of the business fee increase

The City Council unanimously adopted Ordinance 125083 in July of 2016 and implemented last month. The ordinance’s aim is to increase funds to double the original goal of expanding the city’s police force from 100 new officers to 200. To do that, the city increased the Business and Occupation (B&O) tax and restructured the license fee to a graduating rate based on a business’s gross revenues.

Here’s the rundown:

The ordinance states that the goal of the new tax structure is to fund a “minimum of 80 percent of the total anticipated annual costs” for the new goal of expanding police staffing and other law enforcement initiatives.

Bob said that while he respects the police, he doesn’t agree with businesses being responsible for shouldering the full tax burden to support them.

“To expect one segment of the city’s population to bear this financial responsibility without any warning, meeting or chance to discuss a more metered out implementation is to me another “anti-business” move by this arrogant city council and mayor’s office,” he said.

“We have the utmost respect for police officers, we go to a gym in Ballard with several of them, but I just think that’s the wrong way to try and raise money for police officers to put it all on businesses.”

Beyond that, Bob said the tax doesn’t make sense.

“It’s also an unfair tax because you can do $2 million in revenue and our profit margin is 10 to 15 percent, so you are making $100,000 or $150,000,” he said. “It doesn’t really equate. Somebody could do a $500,000 and make $400,000, so it’s just your gross revenue before taxes, but it’s about $8 million I think is what they figured.

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Jack said he tried to find out more information on the tax, first calling the Business Finance Office, then trying the Seattle City Council, which pointed to the Mayor’s Office, which pointed back to the council. Then tried the Chamber of Commerce, who he was told approved of it after negotiations. A message seeking comment has been left with the Seattle Licensing & Tax Administration office.

Markham McIntyre, Chief of Staff for Seattle Metropolitan Chamber of Commerce, said that the business owners are voicing legitimate concerns. He said the Chamber consistently communicated with its 2,200 member businesses about the proposal, noting that Toepfer General Contractors are not among the members. He said there is a rigorous process within the Chamber for vetting public policy proposals with its members, which informs its work with the mayor and city council.

Among the members, he said, there was a general consensus that public safety is a core function of the city and that the tax change is not just the business community shouldering the load.

With that said, McIntyre acknowledged that this is a “significant increase” for some and that they did, and continue to, hear from many businesses that the tax change would be troubling for them. McIntyre agreed with the Toepfers in that the City needs to do a better job of reaching businesses to inform them about these types of changes.

“It’s not necessarily enough to send out a paper flyer,” he said. “… They need to do a better job over the year of reaching out to different businesses in a time and a manner that is useful to them.”

Bob, for his part, was not impressed with the representation for Seattle business.

“I don’t feel that the Chamber of Commerce represented most business owners,” Bob said. “I think they kind of got in bed with the Mayor and said, Oh, this is great. But they didn’t represent … everybody I talked to on Phinney Ridge that owns a business that had their license increased was disappointed and feels blindsided.”

Jack said this tyranny includes the rental housing registration, push for the $15 minimum wage, mandatory sick leave, sick safe harbor leave and the recent proposal for family medical leave.

“Really, what it is is mandating how businesses run as if they run our businesses,” he said. “Basically, as a business owner or a free person in this country, they’re trying to take my liberty away and run my business the way I want to run my business.”

Jack said the government is meant to help regulate small portions to grease the skid of an economy, but not to take it over.

“It’s arrogance is what it is,” he said. “It’s arrogance and disregard for what truly makes an economy in any region and businesses make the economy for a region. And they’re thumbing their nose at that.”

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