If the Seattle City Council had a mantra, it would be “most regressive tax structure in the country.” So Monday the council unanimously voted to make it more regressive by passing a head tax.
The same Seattle City Council that insisted taxing sugary beverages would suppress consumption passed a tax on employment assuming it would not suppress job creation. It will apply to businesses with over $20 million in gross revenue regardless of size. Originally proposed at $500 per employee, a compromise was negotiated to $275 after Amazon stopped work on its current major expansion projects.
While an estimated 585 companies will pay the tax, Amazon was clearly the target of Councilwoman Kshama Sawant and her comrades.
And yes, the Democratic Socialists really did use the word comrades to describe themselves while testifying at Monday’s council meeting. They referred to “workers” and “bosses” like they were auditioning for a part in a Cold War Soviet morality play. Jeff Bezos, founder and CEO of Amazon and owner of the Washington Post, was cast as the symbol of all things evil about capitalism.
It was called the “Durkan-Bezos compromise,” pairing Seattle Mayor Jenny Durkan as co-conspirator with Amazon. In between Socialist Alternative choristers bemoaning backsliding to $275 a head, there were a few other points of view.
The Seattle head tax is predicted to bring in $48 million, representing 1 percent of Seattle’s total city budget for 2018. All funds will be earmarked to serve a swelling homeless population, increasing funding for a yet-to-be-determined basket of programs by 76 percent. Seattle’s spending on its homeless population has exploded in the past four years, with little accountability and no results, according to a few other nonsocialists who testified. Several demanded an audit, and Mayor Durkan has promised transparency.
But the most surprising insight following the Seattle head tax debate was not realizing the city of Seattle spends nearly double Spokane’s budget per capita without being twice as nice. It wasn’t even realizing that Comrade Sawant is a Marxist true believer. It was learning the city of Spokane already has a head tax.
Spokane’s head tax rate is based on the size of a company instead of gross revenues, in a two-tiered business license fee structure. Basic registration is $113 with an additional fee assessed at $10 per head for companies with one to five employees, $15 a head for six to 10 and $20 a head for 11 or more. Nonprofit businesses pay half the basic fee and are exempt from the head tax.
Brian Coddington, director of communications and marketing for the city of Spokane, provided the numbers for 2017. The flat fee portion raised about $2.2 million. The head tax brings in another $1.7 million per year or 0.2 percent of the city of Spokane’s 2018 total budget.
Spokane’s head count includes all part-time and temporary employees in addition to all business owners and “any person employed by or at any business within the city and/or persons who perform any part of their duties within the City of Spokane.” A sole proprietor and his or her spouse are exempt.
Even at $20 a head, the impact on Spokane jobs is minimal. It’s like that $1.99 monthly credit card charge for a marginally useful app – not enough to discourage downloading, but not high enough to prompt the hassle of unsubscribing. Regressive business taxes at any scale affect the economic climate.
In Seattle, there’s another message. More regressive taxes add momentum to the Seattle City Council’s push for a state income tax. Their attempt at a city income tax has been blocked by a judge but is being appealed. As the Socialist chorus chanted after the Seattle vote, “we’ll be back for more.” No mistaking that message.
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