Seattle City Council to vote on $20 million payroll tax hike

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(The Center Square) – The Seattle City Council is set to vote on a bill that would hike JumpStart tax rates to bring in an additional $20 million

The JumpStart Payroll Tax requires businesses with at least $7 million in annual payroll to pay between 0.7%-2.4% on salaries and wages paid to Seattle employees who make at least $150,000 per year. Companies such as Amazon, Meta and Google would be subject to paying the tax.

The proposed adjustment from Seattle City Councilmember Kshama Sawant would increase the minimal rate to 0.8% and the maximum rate to 2.6%. Overall, there would be a 6.5% increase across all the rates, according to Council Bill 119950.

The payroll tax rate increase would result in an additional $20 million in revenue for the city. The funds would transfer over to the Seattle Department of Education and Early Learning and go towards expanding educational support at Seattle Public Schools.

The school district would prioritize mental health services, including school-based mental health counselors and culturally specific and responsive programming from community-based organizations.

During the Select Budget Committee meeting on Nov. 14, Seattle City Councilmember Lisa Herbold cited findings from the Centers for Disease Control and Prevention in 2021 that found 42% students felt persistently sad or hopeless and 22% of students seriously considered attempting suicide and 10% attempted suicide.

Total 2021 payroll tax obligations were approximately $293 million, but fell to $253 million in 2022. The adopted 2023 forecast is set at $294 million, whereas the forecast for 2024 has gone from $311.5 million to $289.9 million.

Sawant proposed three amendments to increase the JumpStart Payroll tax. The first amendment would have increased annual revenues by at least $60 million, whereas the second would have increased annual revenues by at least $40 million.

Both amendments failed out of the city’s select budget committee, leaving the latest amendment to tack on an additional $20 million in payroll tax revenue as the sole survivor in the 2024 budget process.

Sawant cites increases in profits amongst big tech-companies in Seattle, including Amazon, Meta and Google, for proposing payroll increases that would affect these companies.

“Increasing the Payroll Expense Tax by 6.5% is another example of the city council taking a ready-shoot-aim approach to public policy: there is no stated plan with any outcomes, or stakeholder engagement – only a tax increase,” Rachel Smith, president and CEO of the Seattle Metro Chamber, told The Center Square via email. “The young people advocating to better equip schools to support students with mental health are not wrong, but the council passing a tax with no plan and no process is misguided.”

The select budget committee voted 5-3 in favor of recommending the proposed tax increase to the full city council for a final vote on Nov. 21.

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