The Seattle City Council continues to consider a hefty payroll tax on large businesses. The tax faces significant opposition from employers. And has even been the subject of a Wall Street Journal editorial under the headline, “Mindless in Seattle,” which points out,
The economy is on life support, but that isn’t stopping the Seattle City Council from trying to soak employers with a new tax on hiring. The wizards seem not to have heard that when you tax something you get less of it.
A hard-hitting Seattle Times editorial gets right to the point, also in a provocative headline: “Seattle’s war on employers must end now.” The editorial takes on the false charge that businesses are failing to pay their fair share.
Shouldn’t business pay its share? Yes, it already does in Seattle. The city has unusually high business taxes, and business generates a majority of its revenue.
The editorial also points out it’s wrong to cast this tax as a pandemic response.
Sawant and Morales — with assent from council President Lorena Gonzalez and Teresa Mosqueda, budget chair — are spinning the tax as virus response. Yet it was floated before the emergency, and Seattle wouldn’t get new tax revenue until 2022.
The reality:
What Seattle needs is jobs. One in five Washington workers are jobless, Boeing is cutting deeply, and even Amazon is constrained by heavy spending on worker safety and pandemic operating costs.
The payroll tax would take $2.9 billion from employers over five years, reducing dollars available for hiring during the recovery. That encourages firms to hire less or move jobs elsewhere. The largest can hire in other states and cities that don’t take them for granted.
Finally, the editorial board questions whether the council has the authority to bring the matter to a vote now.
Worse, it’s probably illegal. Under Gov. Jay Inslee’s emergency order, cities can only undertake “necessary and routine” or COVID-19 related matters, since the shutdown restricts open meetings.
As the editorial points out,
Seattle drives much of Washington’s economy. If Seattle impedes job growth with a payroll tax, it jeopardizes the state’s recovery and overall success combating the pandemic.
There’s a lot at stake.
