Seattle business groups are calling for a three-year suspension of the JumpStart payroll tax, as well as a suspension of the Business and Occupation tax (B&O) for new businesses. The Downtown Seattle Association, Seattle Metropolitan Chamber of Commerce, and Commercial Real Estate Development Association argue that these measures are necessary to protect businesses’ profits and revitalize downtown, which contributes almost half of the city’s tax revenue.
However, this proposal could lead to a budget gap, as JumpStart raised $231 million in 2021 and is projected to bring in $290 million in 2023 and $311 million in 2024. Council Member Teresa Mosqueda has defended the tax, saying that JumpStart enables the city to invest in childcare, housing stability, and climate resilience. Mosqueda argues that increased government spending during the 2008 Great Recession resulted in swifter economic recoveries and lower unemployment.
The business groups’ proposal could pose a challenge to the future of progressive revenue, as Chamber CEO Rachel Smith sits on the Progressive Revenue Stabilization Work Group designed to find new progressive revenue streams. The business groups also oppose transportation impact fees and building emissions performance standards.
The proposal could influence business candidates running for City Council in the upcoming election, as many have avoided signaling support for new progressive taxes or increases to JumpStart. However, some candidates, such as Alex Hudson in District 3, argue that the proposal would hurt the city’s recovery and make fluctuations in the current economy worse.
In a joint letter to the City Council, the business groups argued that the suspension of JumpStart would allow time for economic recovery and revitalize downtown. They noted that the pandemic has caused significant economic damage to Seattle, with many small businesses struggling to survive. They also argued that downtown Seattle faces a range of challenges, including homelessness, street disorder, and declining occupancy rates, all of which have been exacerbated by the pandemic.
The business groups argued that suspending the payroll tax would help to create a more favorable business environment, attract new investment, and encourage job growth. They also suggested that the suspension of the B&O tax for new businesses would help to stimulate economic growth and encourage new businesses to set up in Seattle.
However, the proposal has faced opposition from some quarters. Council Member Mosqueda has argued that the JumpStart tax is essential for supporting essential services, such as affordable housing and childcare, and for funding the city’s COVID-19 response. Mosqueda has pointed out that the tax is targeted at the city’s largest businesses and that many smaller businesses are exempt.
The proposal could also have broader implications for the future of progressive revenue streams in Seattle. The Progressive Revenue Stabilization Work Group was set up to find new progressive revenue sources, and Chamber CEO Rachel Smith’s involvement in the business groups’ proposal could undermine the group’s efforts.
The proposal could also influence the upcoming City Council elections. Many business candidates have avoided expressing support for new progressive taxes or increases to JumpStart, and the business groups’ proposal could encourage more candidates to take a similar stance.
Overall, the proposal to suspend the JumpStart payroll tax and the B&O tax for new businesses is a controversial one, with business groups arguing that it is necessary for economic recovery and revitalization, while others argue that it would undermine essential services and progressive revenue streams. The City Council will need to weigh these arguments carefully before making a decision.