Businesses call for Seattle City Council to step back from payroll tax. City faces major economic challenges.

Seattle economic problems – before, during, and after the pandemic – include some self-inflicted public policy wounds. Last week, we mentioned the city’s 15% drop in revenues. Seattle Times business writer Jon Talton contributes a lengthy and highly readable article examining some of the challenges faced by businesses in the city. 

Seattle started the year as one of America’s superstar cities, having enjoyed a remarkable run over the previous decade. The pandemic has brought it down much harder than the Great Recession.

But the crisis has been worsened by City Hall.

He leads with the recent attempts to defund the police and treatment of the police chief (more here). Then,

This is the same council that wants to impose a tax on “highly paid” jobs in the city when Seattle’s economy is in a historic downturn.

And,

Activists running the council seem not to understand important connections. For example, a safe city is essential to having an economy to generate the tax revenues and social justice they claim to seek.

The looting, vandalism and arson that marred peaceful protests have been catastrophic for business.

There’s much more in the article, but this should be highlighted.

Big business feeds small business, so both need to be understood as part of the same ecosystem. Now, especially with Amazon largely working from home, many restaurants and small businesses are reaching a point of no return. My barber is one example. He told me his business is down 85% and his lease is up in four months.

Read the whole piece, which reaches this unhappy conclusion.

As for Seattle, the Denny party first christened it New York Alki — “eventually” or “by and by” in Indigenous jargon — when landing on the eponymous point in 1851. Maybe we have finally arrived, but not in a good way: Many of New York City’s challenges, few of its advantages, and a toxic City Hall.

…the destructive political leadership in Seattle, heedless of the economic consequences of their policies, will be with us longer.

As other superstar cities bounce back quickly, repairing the damage here could take years.

A Wall Street Journal article detailing the decline of the San Francisco economy could in large part be republished with “Seattle” replacing “San Francisco.”

For years there’s been talk of a potential exodus from the San Francisco Bay Area, spurred by the exorbitant cost of living and long, slogging commutes. But before coronavirus, leaving the area meant walking away from some of the best-paying and most prestigious jobs in America.

There are signs the exodus is finally happening.

Other factors: Tech workers encouraged to work from home; mid-size cities offering affordable housing and a more relaxed lifestyle; lower taxes; and the infrastructure conducive to remote work. 

The Seattle payroll tax, mentioned by Talton, is again being challenged by business leaders. Geek Wire reports

The Downtown Seattle Association is asking the Seattle City Council to reconsider a new payroll tax following a news report that Amazon polled employees about which communities they’d prefer to work from elsewhere in the region.

“This news should be deeply concerning to the city and is another early warning of the long-term, damaging impacts that Seattle’s tax on jobs will have on recovery, the city’s future economic health, and local tax revenues to fund critical municipal services,” wrote Jon Scholes, president and CEO of the Downtown Seattle Association, in a letter Friday to Council President Lorena Gonzalez and Councilmember Teresa Mosqueda, the City Council budget chair.

Here’s the DSA letter. The Seattle Times reports more on Amazon’s plans.

Amazon is downplaying the latest report that it plans to shift Seattle employees to the suburbs, but business leaders and economic experts warn that, with the pandemic, expensive cities like Seattle face an increasing risk of a corporate exodus…

The Seattle-based online retailer, which normally has around 50,000 employees in Seattle, declined to comment publicly on the Bloomberg reports, but a source familiar with the matter said Amazon workers simply were queried as part of a routine survey. Their responses would help “inform decisions about our long-term growth, especially as COVID-19 is creating new opportunities for workplace options for our corporate employees.”…

But those clarifications will hardly be reassuring for the city’s business community. Amazon, which in 2018 helped kill an earlier “head” tax on large employers by threatening to pare its Seattle presence, now faces the new “JumpStart” tax, which the City Council enacted July 1 to help fund housing, business assistance and community development.

And, yes, the tax affects decision-making.

“The city of Seattle does not need to give employers another reason not to locate in our urban core,” Jon Sholes, president of the Downtown Seattle Association, said in an interview Friday in response to the Bloomberg story. “Our fear is that other companies will consider relocation … given that [Seattle’s new] tax does not apply to other areas within the Puget Sound region,” added Scholes, who sent a formal complaint about the tax to the City Council.

Self-inflicted wounds.