

With reporting by SCC Insight

The Seattle City Council’s proposed legislation to impose a new tax on businesses to help pay for homelessness services has finally seen the light of day and will begin its path through the council chambers with a committee meeting this week.

The proposal from the council’s Lorena Gonzalez and Lisa Herbold aims to raise at least $75 million annually to address the twin crises of affordable housing for the city’s most vulnerable people, and the increasing number of people living unsheltered. It comes in two parts: an ordinance that enacts the tax, and a resolution that lays out the spending plan.

The most crucial new element in the released ordinance is this key exemption: All companies with taxable gross receipts in Seattle of less than $20 million won’t pay the tax. Also, all registered nonprofits are exempt, as are organizations that the city can’t legally tax including federal and state governmental agencies, insurance companies, companies making or selling motor fuel, and liquor distributors.

The proposed ordinance also calls for a split in how the tax is assessed: for 2019 and 2020, it’s a a straight-up employee-hours tax, then in 2021 it switches over to the more complicated infrastructure of tracking a payroll tax that varies by salary, a key ask of business representatives.

The employee-hours tax would be approximately $500 per year for a fulltime employee (about 26 cents per employee-hour worked). The payroll tax would be 0.7%, which means the two taxes are equivalent for an employee making about $36 per hour. Both taxes only apply to employee-hours worked in Seattle.

The resolution, meanwhile, lays out the spending plan for the first five years: 2019 through 2023. It’s a high-level plan that allocates the revenues to several categories of investments and calls upon the executive branch to deliver a detailed implementation plan by December 14.

The bill will be discussed in the Finance and Neighborhoods Committee on April 25 and May 2, with amendments and an anticipated vote out of committee on May 9 and final approval by the full Council on May 14. Public hearings on the bill will be held on the evenings of April 23 and May 2.

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