Seattle Jobs Tax

By JASON MERCIER

Maybe you can teach an old dog new tricks after all. In this case it looks like Seattle voters have finally encouraged their City Council to take a step back from its tax increase trigger-happy ways and instead start listening to those outside of Sawant’s Socialist “movement.” In a stunning reversal, the Seattle Council voted 7-2 today to repeal the new jobs tax it just imposed unanimously last month. The repeal of the jobs tax was facilitated by the fact Seattle voters were set to turn in more than 45,000 signatures (approximately 17,000 were needed) to place a referendum to repeal the tax on the November ballot.

The overwhelming negative reaction to the enactment of the jobs tax and the successful signature gathering effort indicates Seattle voters may have finally reached tax fatigue with the Council.

As WPC’s Vice President of Research Paul Guppy recently told KING 5:

“We're getting to the pain threshold when it comes to taxes in Seattle, because they just keep piling up. Ten special levies are being paid in Seattle, in addition to regular property taxes, in addition to the B&O tax, the high sales tax, and the Sound Transit tax on our cars.”

In a press release announcing the vote to repeal the jobs tax, Seattle Mayor Durkan and 7 city councilmembers said:

“It is clear that the ordinance will lead to a prolonged, expensive political fight over the next five months that will do nothing to tackle our urgent housing and homelessness crisis. These challenges can only be addressed together as a city, and as importantly, as a state and a region. We heard you.”

Judging from some of their comments after that press release was issued, however, how clearly Seattle elected officials actually “heard” voters remains to be seen. Unless Seattle voters and the business community remain engaged and vocal in order to counter the sign-waving chant brigade constantly demanding more tax increases, it is likely we’ll see another proposed tax rise from the jobs tax ashes.

The Seattle jobs tax was also a hot issue beyond the city limits and closely watched by state officials. At our recent two-day Solutions Summit in Bellevue and Spokane, state leaders spoke of the dangers of leaving the jobs tax in place.

Sen. Schoesler noted during our Spokane tax panel:

“I’m really not that concerned about the financial future of Seattle. I am, though, concerned about my colleagues that represent King County that watch HQ2 leave. And I’m worried about the state’s share of revenue, because when they’re building those buildings, 6.5 percent of that is coming back to the state of Washington in sales tax.”

Speaking on the need to repeal the Seattle jobs tax, Sen. Palumbo commented during our Bellevue tax panel:

“We’re all in it together. Whether you like it or not, Seattle is the economic engine of our state.”

The impact of Seattle’s jobs tax on the state was also a topic of conversation at the recent state Economic and Revenue Forecast Council meeting.

Regardless of what happens next, the quick repeal of the Seattle jobs tax illustrates yet again the importance of an engaged electorate and a robust referendum/initiative power. The lesson apparently just learned by Seattle officials would also be good for other elected officials to take to heart.

As noted by the Seattle Times quoting Councilmember O’Brien:

“O’Brien said he, his colleagues and advocates failed to adequately anticipate and discuss a potential referendum as they pushed the tax this spring. ‘The referendum process is a powerful process. And as we are working through the contentious fight, I know I didn’t fully contemplate what that looks like.’”

This lack of anticipation of an aroused public also befell state lawmakers earlier this year when they attempted to exempt themselves from the public records act. The public backlash then and the Seattle jobs tax referendum response now are a good reminder that our state constitution isn’t kidding when it says:

 “All political power is inherent in the people, and governments derive their just powers from the consent of the governed, and are established to protect and maintain individual rights.”

Though today's vote was done reluctantly, it is good to see the Seattle Council listen to voters and terminate its ill-advised jobs tax.