Seattle voters weigh business tax overhaul
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Seattle voters will soon decide whether to hike taxes on some of the cities' largest businesses, while lowering what many smaller businesses pay.
Why it matters: If voters approve Proposition 2 on the Nov. 4 ballot, it will raise an estimated $81 million per year in additional tax revenue for the city — a crucial piece of Seattle Mayor Bruce Harrell's plan to close a budget shortfall that will exceed $140 million next year.
Catch up quick: Supporters of the plan — including Harrell and City Councilmember Alexis Mercedes Rinck — estimate nearly 90% of Seattle businesses would pay lower taxes should the measure pass, while about 75% would no longer pay city business and occupation (B&O) taxes at all.
- Up to $30 million of the estimated annual revenue could be used to offset federal funding cuts — something proponents say is especially needed as the Trump administration threatens to cut funding to Seattle and other so-called sanctuary cities.
How it works: The measure would exempt businesses from paying the city's B&O tax if their gross revenue is less than $2 million a year.
- At the same time, taxes would go up on any portion of a business's revenue that exceeds $2 million.
- Retail, wholesale and manufacturing businesses would see their rates rise from 0.222% to 0.342%.
- Tax rates for services would rise from 0.427% to 0.658%.
What they're saying: "The proposal asks more from big corporations, but it's lifting the burden off of the small and medium business," Ollie Garrett, president and CEO of the Tabor 100, an association of entrepreneurs and business advocates, said in support of the measure during a recent Seattle Channel debate.
The other side: High-volume but low-margin businesses such as independent grocery stores are concerned the tax could cause them to have to raise prices.
- Opponents also worry the tax could cause larger companies to leave Seattle or move jobs elsewhere.
- If passed, the measure "will ultimately result in Seattle defunding its tax base," Jon Scholes, president and CEO of the Downtown Seattle Association, wrote on LinkedIn earlier this year.
What's next: Ballots go out in the mail Wednesday. They must be postmarked by Nov. 4 or placed in an official ballot drop box by 8pm on Election Day to be counted.
Editor's note: This story has been corrected to reflect that Ollie Garrett is the president (not founder) and CEO of the Tabor 100.