The GSBA Blog

GSBA opposes head tax

by Louise Chernin, GSBA President & CEO
| Oct 19, 2017

This letter was sent to the Seattle City Council responding to the proposal to add a head tax on Seattle jobs.

Honorable members of the Seattle City Council,

Late last week several Seattle City Councilmembers proposed a revival of the head tax. GSBA has a long and proud history of supporting truly progressive taxation as well as the idea that everyone needs to contribute their fair share so that our society can pay for our priorities.

Assertions that businesses have both caused all the problems around Seattle’s growth as well as that they have not contributed financially to the City’s budget are patently untrue. This is at least the fifth proposal to directly increase taxes on businesses just in the last year, after: 1) the increase in business license fees to fund additional SPD officers, 2) another increase of the B&O tax, 3) the Seattle soda tax, and 4) the Seattle income tax (which actually does tax small businesses). Moreover, Seattle’s many municipal labor standards have caused cumulative increases in cost of doing business for Seattle businesses of all sizes. Following our membership, GSBA has supported several of these as common-sense proposals for all Seattleites and opposed others as unnecessary or poorly drafted attacks on small businesses. This cumulative effect, made even worse by fast-rising commercial rents, is wearing heavily on our small business community. Further, the growth of businesses both directly and indirectly contributes to raising the amounts collected by the City.

Additionally, while other cities and states are forward thinking and doing their best to encourage and incentivize additional hiring, the City of Seattle is taking a backwards approach by penalizing businesses every time a business hires an additional employee. We want the City to encourage businesses of all sizes to hire people, not create a disincentive. While we appreciate the attempt to exempt small businesses from this proposal, the threshold does not show a proper understanding of the workings of many small businesses in Seattle. Gross revenues are not reflective of profit margins and, thus, actual wealth. According to the initial numbers proposed by Councilmembers O’Brien and Harris-Talley, to raise $24 million/year at an estimated rate of $100/year (Publicola) would mean that about 240,000 employees jobs would be taxed – nearly half of all jobs in Seattle (DSA). Like the income tax this summer, what is being pushed as a tax on only the wealthiest is in fact much broader than the Council seems to want to admit. After years of attempts to institute a universal tax on jobs in Seattle, as well as repeated claims that business is responsible for all that ails Seattle, our members also have little to no faith that the City Council will keep the initial threshold at $5 million in gross revenue once a head tax is implemented.

GSBA and its members are committed to be a constructive and positive partner for the future of our City. We want to find ways to pay for our priorities. However, we are disappointed that the City Council is repeatedly determined to rush through attacks on small business that contribute to a fast-rising cost of doing business in Seattle. We hope, as several City Councilmembers stated during their committee hearings, that the City Council will honestly engage in good-faith discussions with the entirety of the business community about what this proposal means.


Louise Chernin, GSBA President & CEO


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