Seattle electeds have finally realized that they can’t simply rely on the Jumpstart Tax, a progressive (but fluctuating) payroll tax, to backfill budget shortfalls in perpetuity, and they are pursuing new progressive revenue options. I know, I know, this city council and this mayor finding new revenue methods? Our financial outlook is that bad.
The Seattle Shield Initiative united an odd duo, Councilmember Alexis Mercedes Rinck and Mayor Bruce Harrell. Together, they proposed the initiative to help alleviate the financial stress that a $251 million deficit across all fund balances—and Trump in the White House—will put on the city.
The initiative will temporarily raise business and occupation (B&O) taxes to fund programs threatened by the Donald Trump administration such as investments in housing vouchers, shelters, food and nutrition access, resources for survivors of gender-based violence, and affordable housing. But it gets better. The initiative doesn’t raise the B&O tax for all businesses, only some. Under the initiative, to help bolster struggling mom and pop shops, many small businesses which actually stop paying B&O tax. Sounds pretty good, right?
Not if you’re part of a big business organization. The Downtown Seattle Association (DSA, but not the cool one) and the Seattle Chamber of Commerce have already poo-poo’d the proposed initiative.
Jon Scholes, the president and CEO of the DSA (derogatory) and frequent bad-opinion columnist at the Seattle Times, said in a statement that the Trump tariffs are already bad for business and city leaders are about to “make things worse on local companies” with this new tax.
“This proposal is a tax on downtown Seattle’s revitalization and a self-inflicted wound to the progress we’ve been making to attract more businesses downtown and strengthen the city’s tax base. It will make it harder to fill empty tall office buildings and storefronts with companies, which will threaten the commercial tax base and shift more of the tax burden to residents,” Scholes wrote.
The Seattle Shield Initiative will raise the B&O tax threshold exemption from $100,000 to $2,000,000 in gross revenue, which means 76 percent of small businesses won’t pay any B&O tax at all. Meanwhile, only businesses earning more than $2 million in revenue will have to pay a higher tax than they did before. According to a press release from the city, “approximately 90% of businesses would owe less than they do today.”
Of course, that means those high-earners would shoulder the B&O tax. This is unfair, according to Scholes.
“City leaders should heed the lessons from the past and reject boneheaded ideas solely concocted in the name of fighting President Trump,” Scholes wrote. “This rushed tax proposal is bad fiscal policy that will set Seattle back and raise costs for residents.”
He had some big, weird feelings (“It’s the fiscal policy version of Seattle’s defund the police movement and if passed will ultimately result in Seattle defunding its tax base,” he wrote on LinkedIn. “This idea should be thrown in the trash bin next to the remnants of defund the police, CHOP/CHAZ, legalizing drugs, etc”) and I’m sure we’ll hear more from him in a forthcoming Seattle Times editorial. But, I must say, this is pretty funny outrage coming from the organization that just pushed policy through the Seattle City Council to put eyesore digital advertising kiosks on Seattle streets. The money earned from those kiosks will go right back into DSA coffers. Maybe they can use some of that money to help their struggling big businesses pay the B&O tax increase.
In response to these comments, at a press conference, Harrell said, “We think it’s good policy, and we would disagree [with the DSA].”
Remember, this is from longtime DSA (again, not the socialist one) ally Harrell. Do we… gotta hand it to him?
“We are not trying to run business out of Seattle, we are open for business,” Harrell, newly anointed fan of progressive revenue (or just a man worried about being another one-term mayor) continued. “So as we look at dealing with a $250 million deficit… The fact is that the state legislature only gives us so many tools, and this is a tool we think along the lines of progressive revenue that is a smart policy to adopt...We will do everything possible to continue to have a healthy business environment, but we stand behind this policy.”
In a statement to The Stranger, Mercedes Rinck said, "It’s true. This proposal progressively shifts B&O tax burden to the largest businesses in Seattle. The top 10 percent will pay more, and the bottom and middle will pay less. I think we can all see that as a worthwhile investment in the local community, workforce, and economy. What will actually set Seattle back is doing nothing while thousands in our community are on the brink of food insecurity and homelessness due to draconian federal cuts."
Wealthy business owner grips aside, this initiative is a boon for small businesses, according to Jeanie Chunn, community activist, longtime small business advocate, and current candidate for City Council District 2.
Chunn, who helped engage small business owners on this initiative for Rinck's office, described how paying fewer B&O taxes will make a huge difference. Especially for businesses operating on the margins like restaurants, having extra funds could pay for much-needed new equipment, new benefits for employees, or repairs. The initiative will provide “much welcomed relief,” she wrote in an email.
According to Chunn, most restaurants fall under the $2 million revenue threshold. Even for those who rake in over $2 million annually, they’ll still pay less in local B&O taxes than they do currently because “it's only on sales over $2M.”
The Seattle Metropolitan Chamber of Commerce jumped to its usual excuses for the reasons we can’t raise taxes: it has some “interesting ideas,” but it’s “rushed,” and companies just can’t afford it right now.
“I think the Chamber of Commerce's outrage over this initiative shows that they have and will always represent the interests of large corporations and not locally-owned businesses, small business owners, or the workers of Seattle,” Chunn wrote.
"If the Seattle Metropolitan Chamber of Commerce only wants to advocate for the preferences of their Emerald and Platinum members, that is their prerogative," Mercedes Rinck told The Stranger. "Local government has responsibility to step up in this moment, and our proposal gives Seattle residents that choice."
However, the Seattle Shield Initiative is not law yet. Rinck will need to curry favor with the other members of the council. They will have to vote on the initiative by Aug. 5. If approved, we the people will get to have our say in the November election.
Editor's Note: This story has been updated since it's original publication to include comments from City Councilmember Alexis Mercedes Rinck.
