Effort to Repeal Seattle ‘Tax on Jobs’ Launched

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By Paul Shukovsky

A group seeking to repeal Seattle’s recently enacted employee head count tax has begun deploying volunteer signature gatherers with the goal of putting a referendum on the November ballot.

The group calling itself “No Tax on Jobs” registered as a political committee May 18, just four days after the city council passed the tax over the vocal objections of Amazon.com Inc., Seattle’s largest employer with more than 45,000 people on the payroll in its headquarters.

The ordinance as amended imposes an employee hours tax beginning Jan. 1, 2019, on businesses with annual incomes exceeding $20 million—levying a tax of about $275 per year for each full-time employee based on a rate of $0.14323 per hour worked. It is expected to generate about $48 million in revenue from some 585 companies, about 3 percent of those doing business in the city. The revenue will go toward affordable housing and wraparound services in an economically vibrant city where a tech boom has sparked a sharp spike in rents and homelessness.

Amazon made clear its antipathy toward the tax by leveling a threat May 2 to halt growth in Seattle pending the outcome of a city council vote on the measure. The company announced it had paused all work on two big real-estate projects in the city that would house more than 7,000 employees pending the vote. The threat galvanized opposition from a business community already concerned about the tax.

While Amazon announced it would resume work on one of its real estate projects after the measure passed May 14, company Vice President Drew Herdener said in an email: “We are disappointed by today’s City Council decision to introduce a tax on jobs. We remain very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here.”

‘Terrible Socialist Precedent’

It’s unknown whether Amazon supports the repeal effort. The company didn’t respond to a Bloomberg Tax email query sent May 21. The No Tax on Jobs committee won’t be required to begin reporting on campaign contributions until the first week in June.

At least 100 volunteer signature gatherers have already hit the streets in an effort to get the almost 18,000 signatures they will need by the mid-June deadline to get the repeal referendum on the November ballot, committee Secretary Saul Spady told Bloomberg Tax May 22. Both Spady, who owns an advertising company, and committee chairman James Maiocco, an attorney and chief business development officer with Pushpay, a Redmond-based tech firm, characterize their group as a grassroots response to the passage of the tax.

“We’ve had conversations with numerous civic, community, and labor groups,” Maiocco told Bloomberg Tax May 21. But neither Maiocco nor Spady reported having conversations with Amazon or other large businesses that have publicly opposed the head tax, such as Starbucks, also headquartered in Seattle.

“We’re getting inquiries and support from a variety of cities across the country who are concerned that if this referendum were to fail, that Seattle would be setting a terrible socialist precedent,” Maiocco said.

To contact the reporter on this story: Paul Shukovsky in Seattle at pshukovsky@bloomberglaw.comTo contact the editor responsible for this story: Ryan C. Tuck at rtuck@bloombergtax.com

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