![Seattle City Council in session January 2018](https://upload.wikimedia.org/wikipedia/commons/c/cb/Seattle_City_Council_in_session_January_2018.jpg)
The Seattle head tax, officially the employee hours tax (EHT), was a proposed
head tax
A poll tax, also known as head tax or capitation, is a tax levied as a fixed sum on every liable individual (typically every adult), without reference to income or resources.
Head taxes were important sources of revenue for many governments fr ...
to be levied on large employers in
Seattle
Seattle ( ) is a seaport city on the West Coast of the United States. It is the seat of King County, Washington. With a 2020 population of 737,015, it is the largest city in both the state of Washington and the Pacific Northwest regio ...
, Washington, United States. The head tax was proposed in 2017 to fund
homeless
Homelessness or houselessness – also known as a state of being unhoused or unsheltered – is the condition of lacking stable, safe, and adequate housing. People can be categorized as homeless if they are:
* living on the streets, also kn ...
services and outreach and was set at a rate of $275 annually per employee, with hopes of raising up to $50 million annually.
The controversial head tax ordinance was passed by the
Seattle City Council
The Seattle City Council is the legislative body of the city of Seattle, Washington. The Council consists of nine members serving four-year terms, seven of which are elected by electoral districts and two of which are elected in citywide at-lar ...
in May 2018 and was signed into law by Mayor
Jenny Durkan
Jenny Anne Durkan (born May 19, 1958) is an American attorney, former federal prosecutor, and politician who served as the 56th mayor of Seattle, Washington. She is the daughter of Martin Durkan. Durkan is a member of the Democratic Party. Afte ...
, to be in effect for five years before consideration for renewal. The tax was criticized for targeting
Amazon
Amazon most often refers to:
* Amazons, a tribe of female warriors in Greek mythology
* Amazon rainforest, a rainforest covering most of the Amazon basin
* Amazon River, in South America
* Amazon (company), an American multinational technology c ...
, the city's largest employer, and was opposed by the business community. A
citizen referendum was planned by business groups and gathered enough signatures to qualify for an upcoming election, but the city council repealed the head tax less than a month later.
Background
Mayor
Greg Nickels
Gregory J. Nickels (born August 7, 1955) is an American politician who served as the 51st mayor of Seattle, Washington. He took office on January 1, 2002 and was reelected to a second term in 2005. In August 2009, Nickels finished third in the p ...
proposed an employee hours tax, dubbed a "head tax" by the local media, of $25 per employee in 2006 to fund sidewalk and street maintenance. The tax exempted employees that used
carpool
Carpooling (also car-sharing, ride-sharing and lift-sharing) is the sharing of car journeys so that more than one person travels in a car, and prevents the need for others to have to drive to a location themselves.
By having more people usi ...
, transit, bicycling, or walking to commute and charged a partial tax on part-time employees.
The city council adopted the head tax as part of the "Bridging the Gap" transportation levy, which was approved by voters in the November 2006 election. It took effect on July 1, 2007, and was expected to raise $51.5 million over the nine-year span of the levy.
The tax was immediately unpopular with businesses and was campaigned against by new city councilmember
Tim Burgess and two challengers to Nickels in the
2009 mayoral election.
Nickels, along with councilmembers Burgess and
Richard Conlin
Richard Conlin is a former member of the Seattle City Council, first elected to council in 1997 and reelected in 2001, 2005, and 2009. He was elected, unanimously, by the council to be its president on January 7, 2008 and was unanimously reelec ...
, proposed to repeal the head tax in June 2009, amid the
economic recession
In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various ...
. The head tax raised $4.7 million in 2008, falling below the forecast of $5.5 million.
Nickels later withdrew his support of the repeal, but the council's budget committee voted 8–1 in November to repeal the tax in order to stimulate business growth.
City councilmembers
Kshama Sawant
Kshama Sawant (; born October 17, 1973) is an Indian-American politician and economist who has served on the Seattle City Council since 2014. She is a member of Socialist Alternative (United States), Socialist Alternative, the first and only mem ...
and
Nick Licata attempted to revive the head tax in 2014 to fund
King County Metro
King County Metro, officially the King County Metro Transit Department and often shortened to Metro, is the public transit authority of King County, Washington, which includes the city of Seattle. It is the eighth-largest transit bus agency in t ...
service after the agency announced that its reduced revenue would lead to reduced bus service hours. The $18 per employee tax was opposed by downtown businesses and not considered by the city council, who instead placed a vehicle registration tax that was passed by voters in November 2014. Sawant and Licata unsuccessfully attempted to use the head tax to fund a second transportation levy, which instead relied on a
property tax
A property tax or millage rate is an ad valorem tax on the value of a property.In the OECD classification scheme, tax on property includes "taxes on immovable property or net wealth, taxes on the change of ownership of property through inheri ...
, and later to fund a
municipal broadband
Municipal broadband is broadband Internet access owned by public entities. Services are often provided either fully or partially by local governments to residents within certain areas or jurisdictions. Common connection technologies include unlice ...
service, which was rejected for further consideration. A smaller employee hours tax was proposed in a 2016
initiative
In political science, an initiative (also known as a popular initiative or citizens' initiative) is a means by which a petition signed by a certain number of registered voters can force a government to choose either to enact a law or hold a pu ...
filed by the local chapter of the
Service Employees International Union
Service Employees International Union (SEIU) is a labor union representing almost 1.9 million workers in over 100 occupations in the United States and Canada. SEIU is focused on organizing workers in three sectors: healthcare (over half of member ...
to fund a city labor oversight office, but it failed to reach the ballot.
Homelessness and housing affordability
In November 2015, mayor
Ed Murray and county executive
Dow Constantine
James Dow Constantine (born November 15, 1961) is an American politician, lawyer, and urban planner in the state of Washington who is serving his third term as King County Executive, an office he has held since November 2009. He was in the state ...
declared a "
state of emergency
A state of emergency is a situation in which a government is empowered to be able to put through policies that it would normally not be permitted to do, for the safety and protection of its citizens. A government can declare such a state du ...
" over the region's
ongoing homelessness crisis, citing an increase in the number of homeless individuals. Seattle and King County spent over $196 million in 2017 to address homelessness issues, using federal housing funds and their respective
general fund
Fund accounting is an accounting system for recording resources whose use has been limited by the donor, grant authority, governing agency, or other individuals or organisations or by law.Leon E. Hay (1980). ''Accounting for Governmental and Non ...
s. In 2017, Mayor Murray proposed a $275 million property tax levy to fund permanent housing units and mental health treatment over a five-year period. Murray withdrew the proposal in favor of a potential countywide ballot measure that would use sales taxes to fund similar programs. According to an independent report released in early 2018, King County would need up to 14,000 additional
affordable housing
Affordable housing is housing which is deemed affordable to those with a household income at or below the median as rated by the national government or a local government by a recognized housing affordability index. Most of the literature on affo ...
units to house the homeless, costing $410 million annually. In a March 2018 poll of likely voters by FM3 Research, 80 percent of respondents were dissatisfied with the city's approach to affordable housing and 83 percent were dissatisfied with the addressing of the homelessness crisis.
Proposal and political debate
The head tax proposal was revived once again in late 2017 by councilmembers
Mike O'Brien and
Kirsten Harris-Talley
Kirsten Harris-Talley (born 1979) is an American politician serving as a member of the Washington House of Representatives from the 37th legislative district. She assumed office on January 11, 2021.
Early life and education
Harris-Talley was ...
, using $100 per employee to generate $24 million in annual revenue for homeless re-housing programs. The proposal was opposed by businesses but drew partial support from
mayoral candidates Jenny Durkan
Jenny Anne Durkan (born May 19, 1958) is an American attorney, former federal prosecutor, and politician who served as the 56th mayor of Seattle, Washington. She is the daughter of Martin Durkan. Durkan is a member of the Democratic Party. Afte ...
and
Cary Moon
Carol Consuela Moon (born June 21, 1963) is an American political activist who was part of the campaign to re-open Seattle's waterfront after the replacement of the Alaskan Way Viaduct. Moon was a candidate for Mayor of Seattle in the 2017 mayor ...
. The proposed tax was increased to $125 per employee and rejected by the city council in November, by a 5–4 margin.
In its rejection of the head tax proposal, the city council also convened a
task force to investigate alternative revenue sources before revisiting the use of a head tax. The tax force recommended the adoption of a $75 million head tax, at a rate of up to $480 per employee, to fund homelessness services. The proposal was once again criticized by a consortium of business leaders as a tax on jobs or one targeted at
Amazon
Amazon most often refers to:
* Amazons, a tribe of female warriors in Greek mythology
* Amazon rainforest, a rainforest covering most of the Amazon basin
* Amazon River, in South America
* Amazon (company), an American multinational technology c ...
, also accusing the city government of ineffectively using taxpayer revenue allocated for homelessness services.
The full proposal was released in April 2018, outlining a tax on large employers with annual revenues of over $20 million, of which roughly 500 businesses would be affected. The tax would generate $75 million in annual revenue with a per-employee tax of $540, but would be replaced by a 0.7 percent
payroll tax
Payroll taxes are taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their employees. By law, some payroll taxes are the responsibility of the employee and others fall on the em ...
in 2021. A study from the city council stated that 75 percent of the revenue would be used to build 2,000 units of
affordable housing
Affordable housing is housing which is deemed affordable to those with a household income at or below the median as rated by the national government or a local government by a recognized housing affordability index. Most of the literature on affo ...
, while 20 percent would be used on homeless services.
Mayor Durkan and business groups requested several modifications to the proposed head tax, mainly in the form of a lowered rate and the specific exemption of smaller businesses. Amazon responded to the head tax proposal by threatening to halt development of a new downtown office tower and explore
subleasing for its space in the
Rainier Square Tower
Rainier Square Tower is a mixed-use skyscraper in the Metropolitan Tract of downtown Seattle, Washington. The tall, 58-story tower is located at Union Street between 4th and 5th Avenues adjacent to the existing Rainier Tower; it is the second-t ...
, affecting 7,000 potential jobs. A compromise proposal was announced by Durkan on May 10, reducing the per-employee rate to $250 and replacing the proposed payroll tax with a five-year period for the head tax, which would only generate $40 million per year. Durkan's proposal was rejected by a split vote of the city council's finance committee the following day, instead favoring the original $75 million version of the head tax.
On May 14, the city council unanimously passed Durkan's compromise version of the head tax after the mayor threatened to
veto
A veto is a legal power to unilaterally stop an official action. In the most typical case, a president or monarch vetoes a bill to stop it from becoming law. In many countries, veto powers are established in the country's constitution. Veto ...
the larger head tax, which did not have a large enough majority to override a mayoral veto.
The compromise was reached after several meetings between the mayor and the four councilmembers who had supported the larger head tax proposal. Mayor Durkan signed the head tax ordinance into law on May 16, pledging to build 600 new affordable housing units and subsidizing additional units and beds at
homeless shelter
Homeless shelters are a type of homeless service agency which provide temporary residence for homeless individuals and families. Shelters exist to provide residents with safety and protection from exposure to the weather while simultaneously r ...
s. The approved version of the $275 per-employee head tax would generate $47 million from businesses with gross revenues of over $20 million, affecting about 3 percent of businesses in the city. Amazon would provide an estimated $10 million of the annual revenue, due to its 45,000 employees in the city.
The head tax was scheduled to take effect on January 1, 2019, and require renewal by a full council vote in 2023.
Opposition and repeal
![No Tax on Jobs signature gatherers at Seattle Central Library](https://upload.wikimedia.org/wikipedia/commons/f/f8/No_Tax_on_Jobs_signature_gatherers_at_Seattle_Central_Library.jpg)
The city's largest employers, including Amazon and
Starbucks
Starbucks Corporation is an American multinational chain of coffeehouses and roastery reserves headquartered in Seattle, Washington. It is the world's largest coffeehouse chain.
As of November 2021, the company had 33,833 stores in 80 c ...
, and several construction
labor union
A trade union (labor union in American English), often simply referred to as a union, is an organization of workers intent on "maintaining or improving the conditions of their employment", ch. I such as attaining better wages and benefits ( ...
s released statements criticizing the city council's decision and its approach to addressing homelessness. Business groups who remained opposed to the head tax responded days later with the formation of a campaign to overturn the city council decision through a
citizens' initiative
In political science, an initiative (also known as a popular initiative or citizens' initiative) is a means by which a petition signed by a certain number of registered voters can force a government to choose either to enact a law or hold a pu ...
. The campaign, named "No Tax on Jobs", received $325,000 in committed donations from local economic development groups and businesses, including Amazon, Starbucks,
Kroger
The Kroger Company, or simply Kroger, is an American retail company that operates (either directly or through its subsidiaries) supermarkets and multi-department stores throughout the United States.
Founded by Bernard Kroger in 1883 in Cincin ...
(owners of
Fred Meyer
Fred Meyer is an American chain of hypermarket superstores founded in 1922 in Portland, Oregon, USA, by Fred G. Meyer. The stores are found in the northwest U.S., within the states of Oregon, Washington, Idaho, and Alaska. The company merged w ...
and
QFC
Quality Food Centers, better known as QFC, is a supermarket chain based in Bellevue, Washington, with 62 stores in the Puget Sound region of the state of Washington and in the Portland, Oregon, metropolitan area. QFC is a subsidiary of Kroger.
...
),
Albertsons
Albertsons Companies, Inc. is an American grocery company founded and headquartered in Boise, Idaho.
With 2,253 stores as of the third quarter of fiscal year 2020 and 270,000 employees as of fiscal year 2019, the company is the second-large ...
(owners of
Safeway
Safeway is an American supermarket chain founded by Marion Barton Skaggs in April 1915 in American Falls, Idaho. The chain provides grocery items, food and general merchandise and features a variety of specialty departments, such as bakery, d ...
), and
Vulcan, Inc.
Vulcan LLC is a privately held company founded by the Microsoft co-founder Paul Allen and his sister Jody Allen in 1986 to establish and oversee the family's diverse business activities and philanthropic endeavors. It includes Vulcan Real Estate ...
The campaign was given until June 14 to collect 17,600 valid signatures to bring the initiative to the November 2018 ballot, and reportedly surpassed the threshold by June 11 using on-street petitioning by 2,000 volunteers.
![Seattle City Council members Kshama Sawant and Teresa Mosqueda](https://upload.wikimedia.org/wikipedia/commons/a/a3/Seattle_City_Council_members_Kshama_Sawant_and_Teresa_Mosqueda.jpg)
On June 11, less than a month after the unanimous approval of the head tax, the city council announced plans for a special session to consider repealing the tax, to be held the following day. The seven councilmembers who are up for re-election in 2019, along with Mayor Durkan, voiced their support for the repeal in the wake of the initiative's signature-gathering campaign. The repeal was passed by a 7–2 vote of the city council, despite several interruptions from supporters of the tax. The two dissenting councilmembers, Sawant and
Teresa Mosqueda
Teresa Carmen Mosqueda (born July 4, 1980) is an American politician and labor activist from Seattle, Washington. She was elected to the Seattle City Council in 2017 to represent the at-large position 8. In 2023, she announced that she would run ...
, criticized the repeal for being unaccountable and a "cowardly betrayal". The 24-hour notice for the special session was also criticized for being potentially in violation of the state's advance notice laws.
Aftermath
In response to Seattle's head tax, officials from
Tacoma and
Pierce County announced a $275
tax credit
A tax credit is a tax incentive which allows certain taxpayers to subtract the amount of the credit they have accrued from the total they owe the state. It may also be a credit granted in recognition of taxes already paid or a form of state "disc ...
per employee for new jobs to lure businesses. Business leaders from the
Eastside area of King County sought to use the head tax to promote suburban job creation, but feared that Seattle's head tax would cause businesses to leave or avoid the region entirely. Other large metropolitan areas in the Western United States, such as
Phoenix
Phoenix most often refers to:
* Phoenix (mythology), a legendary bird from ancient Greek folklore
* Phoenix, Arizona, a city in the United States
Phoenix may also refer to:
Mythology
Greek mythological figures
* Phoenix (son of Amyntor), a ...
, began recruiting Seattle-area businesses for potential moves, citing lower taxes and
cost of living
Cost of living is the cost of maintaining a certain standard of living. Changes in the cost of living over time can be operationalized in a cost-of-living index. Cost of living calculations are also used to compare the cost of maintaining a c ...
.
Seattle's head tax inspired similar proposals in the
Silicon Valley
Silicon Valley is a region in Northern California that serves as a global center for high technology and innovation. Located in the southern part of the San Francisco Bay Area, it corresponds roughly to the geographical areas San Mateo County ...
region of
California
California is a U.S. state, state in the Western United States, located along the West Coast of the United States, Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the List of states and territori ...
, which shares similar housing affordability and homelessness problems. The cities of
San Francisco
San Francisco (; Spanish language, Spanish for "Francis of Assisi, Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the List of Ca ...
,
Mountain View,
Cupertino
Cupertino ( ) is a city in Santa Clara County, California, United States, directly west of San Jose on the western edge of the Santa Clara Valley with portions extending into the foothills of the Santa Cruz Mountains. The population was 57,8 ...
, and
East Palo Alto
East Palo Alto (abbreviated E.P.A.) is a city in San Mateo County, California, United States. As of the 2020 census, the population of East Palo Alto was 30,034. It is situated on the San Francisco Peninsula, roughly halfway between the cities of ...
all released proposals to tax large businesses, targeted at large
tech companies
A technology company (or tech company) is an electronics-based technology, technological company, including, for example, business relating to digital electronics, software, and internet-related services, such as e-commerce services.
Details
Accor ...
. Mountain View and San Francisco both proposed to introduce a head tax to fund homelessness services on a
ballot measure
A referendum (plural: referendums or less commonly referenda) is a direct vote by the electorate on a proposal, law, or political issue. This is in contrast to an issue being voted on by a representative. This may result in the adoption of a ...
; Mountain View would charge $8 to $149 per employee to fund $6 million in transportation and affordable housing programs, while San Francisco's would raise up to $300 million annually for homeless services. Both ballot measures were passed in the November 2018 elections.
JumpStart Seattle
In June 2020, councilmember Teresa Mosqueda announced a proposed a new employer tax that would be based on the number of highly paid employees rather than total employees. The plan, named "JumpStart Seattle", would affect companies with annual payrolls above $7 million and levy a 0.7 to 2.4 percent tax on employees making more than $150,000 in annual income. The tax would provide additional revenue to fill a funding gap caused by the
COVID-19 pandemic
The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identif ...
and generate $214 million in 2021. The JumpStart Seattle plan was passed 7–2 in a full council vote on July 6, 2020, with mayor Jenny Durkan voicing her objections to the bill being passed without a detailed spending plan. The tax became law without mayor Durkan's signature.
The employer tax will be used as part of a $86 million COVID-19 relief package for residents and small businesses that was approved on July 20.
Mayor Durkan vetoed the bill on August 1, calling the plan "irresponsible".
See also
*
Government and politics of Seattle
Seattle is a charter city in the U.S. state of Washington with a mayor–council form of government. The Mayor of Seattle is head of the executive branch of city government, and the Seattle City Council, led by a Council President, is the legisla ...
*
Homelessness in Seattle
In the Seattle King County area, there were estimated to be 11,751 homeless people living on the streets or in shelters. On January 24, 2020, the count of unsheltered homeless individuals was 5,578. The number of individuals without homes in Emer ...
References
{{reflist
2018 in Seattle
Economy of Seattle
Government of Seattle
Local taxation in the United States