The case for taxing big business

Tim Eyman just blasted a hole in the city’s transportation budget that’s the shape of an $80 car-tab fee, and the new council will play a large role in figuring out how to fill it. Luckily, there’s a natural opportunity coming up to raise new money for transit. Seattle Transportation Benefit District Proposition 1, which funds a good chunk of the city’s bus service, will expire at the end of next year. This accounts for $60 of those car-tab fees, plus a 0.1% sales tax, totaling about $50 million per year. The obvious choice for replacing those funds is to double down on the sales tax by asking voters to raise it to 0.2% — but that would only extend funding at the current level, while also making our tax system even more regressive. If we’re at all serious about climate change and transcending car culture, not to mention plugging other holes left by I-976, we should look to a much bigger measure.

So why not tax big business instead? Several U.S. transit agencies, including Portland’s TriMet and New York City’s Metro, are funded partly through employer taxes. And Seattle has options. Sure, there’s the controversial “head tax,” which could be made more palatable by raising the exemption threshold to $50 million in gross receipts or even higher. But how about an employer-side payroll tax? Not many people remember this now, but last year’s big business tax legislation, as first introduced before Amazon negotiated it down, would have shifted to a payroll-based tax as soon as the city could set up the administrative apparatus. That’s a more progressive option than a flat “head tax,” since tech and other corporations that employ high-paid workers would end up paying more per employee, while low-margin businesses like grocery stores would pay less. No wonder Amazon didn’t like it. With a vote of the people, the city could also restructure its existing business and occupation tax to make it more progressive, then raise the rate for the largest corporations. Finally, Seattle could follow in Portland’s footsteps and design a tax based on excessive executive pay.

‘The man for the job’

And which councilmember should champion this cause? It would seem natural for leadership to come from within our new seven-member progressive supermajority. Perhaps Tammy Morales, who has already expressed a commitment to local tax reform. Or maybe Sawant, who has never ceased the call to tax Amazon and is now the council’s senior member. But I have a different idea. I think Alex Pedersen is the man for the job.

Earlier this year, during the primary elections, I kept hearing that Pedersen had opposed Sound Transit 3. He was racking up endorsements from the Seattle Metropolitan Chamber of Commerce, the Washington Technology Industry Association and The Seattle Times editorial board, so it was natural to think of him as the candidate of big business. Imagine my surprise, then, when I finally learned Pedersen’s stated reasons for opposing the measure. In a post on his since-deleted neighborhood blog he wrote: