Three different "head tax" proposals
There are three “head tax” proposals. Two would apply to only businesses in Seattle. It is unclear if the businesses that have their headquarter outside of Seattle, but have branch office in Seattle would be included. The exact details on the two Seattle taxes are not available yet. The third “head” tax is proposed by former Speaker Frank Chopp who is running for reelection. Some speculate that the Mosqueda proposal is an attempt to propose a more reasonable tax than Sawant’s. Last year the Legislature considered a King County head tax proposal that had some business support, but it did not make it out of the Finance Committee. The details on how the King County tax would be implemented were both complicated and unclear. It would be easier for Seattle to pass its own tax since it just requires a majority vote of the council that could withstand a possible veto by the mayor. A description of each proposal is below.
Seattle Councilmember Mosqueda proposal: Jump Start Seattle
- Businesses with total payroll between $7 million and $1 billion would pay a tax of 0.7% on any employee making between $150,000 and $500,000. The tax on employees making more than $500,000 would be 1.4%
- Businesses with a total payroll over $1 billion would pay a 2.1% tax. It is unclear how many businesses this would be in this category.
- Excludes grocery and government.
- Generates $200 million a year. Spent on housing, homelessness and other social programs.
- Effective in 2021 with a 10 year sunset or would be repealed if replaced with a similar state or county tax.
- Has some business support, but general business groups oppose it.
Seattle Councilmembers Sawant and Morales proposal:
- 1.3% payroll tax on most companies with more than $7 million in annual payroll. Appears to be on all employees, but that is unclear.
- Excludes grocery and some other entities.
- Generates 500 million a year from 800 businesses.
- Does not appear to be getting traction with the rest of the council.
Rep. Frank Chopp proposal: Health Equity and Recovery Trust
- Companies would pay a 5% tax per employee compensation exceeding $500,000 and a 10% tax per employee for compensation exceeding $10 million
- Would raise $500 million a year.
- Would apply statewide.
- Also has a more traditional capital gains tax as part of his package.
