A coalition of 12 King County mayors is pushing back on two state budget proposals that call for raising taxes on large businesses in Washington.
Washington is currently facing a projected multibillion-dollar budget shortfall.
They argue that these proposals could push businesses out of Washington, taking jobs away from the region.
“These companies have choices about where they can do their business,” said Auburn Mayor Nancy Backus. “These taxes will make attracting jobs, great jobs much harder.”
Supporters of the proposals argue the budget shortfall won’t close itself, and push back on the idea that businesses will leave Washington because of tax changes. They argue the proposals are necessary to provide Washingtonians with the same level of services they rely on.
The group opposing the measures is focused specifically on two: one that would implement a surcharge on large businesses through Washington’s Business and Occupation tax, and one that would implement a payroll tax similar to Seattle’s “JumpStart” tax.
That proposal, issued by Democrats in the state senate, proposes removing the cap on employer payroll taxes, placing a 5% tax on large employers “on the amount of payroll expenses above the Social Security threshold — currently $176,100 per year.” Senate Democrats say this would be limited to companies with $7 million or more.
The proposal is similar to the city of Seattle’s “JumpStart” tax and includes a full credit for businesses already paying that tax.
Senate Democrats say it would raise about $2.3 billion per year and help fund public schools, health care, as well as other programs for residents.
Critics say Seattle’s “JumpStart” tax has pushed businesses to find operating locations elsewhere, pointing to Amazon’s move to relocate some of its employees to Bellevue.
The other proposal, from Democrats in Washington’s House, calls for a tax surcharge on businesses with taxable income over $250 million and increase to the surcharge on specified financial institutions with annual net income of $1 billion or more from 1.2% to 1.9%.
House democrats say these surcharges will prevent harmful cuts to education, public safety and allow lawmakers to continue investing in critical public services.
“We’re only going to be able to help both local governments, local school districts and communities pay for things that we know are important to Washington’s safety and health and business climate, if we can pay the bills,” said Washington House Majority Leader Rep. Joe Fitzgibbon.
Critics of these proposals include the mayors of Auburn, Bellevue, Black Diamond, Covington, Carnation, Enumclaw, Federal Way, Issaquah, Kirkland, Normandy Park, Redmond, and Renton.
In a letter to several Washington lawmakers, they voiced concern that these policies could “destabilize” Washington’s economy and “have detrimental effects on our region’s economic competitiveness, job market and overall fiscal health.”
“We fear these proposals discourage the kind of growth that empowers our workforce and local economies,” said Renton Mayor Armando Pavone.
Several spoke of their concern about a trickle-down effect if large corporations flee the state, noting in the letter that corporate jobs don’t exist in a vacuum.
“The coffee shops in my community, the doctors, the dentists, the shops, the bakeries, all of those things rely on the tech industry,” said Redmond Mayor Angela Birney.
Rep. Fitzgibbon pushed back on the idea that tech jobs would leave Washington if these proposals go through, noting that none of these proposals are in final form and that lawmakers are working with employers to find a solution that works for everyone.
“We are sensitive to making sure that we maintain a competitive business climate,” he said.
KIRO 7 asked several of the mayors voicing opposition if they had any alternative suggestions to filling the budget gap.
Auburn Mayor Nancy Backus did not offer any additional specific ideas. She said at this point, the coalition is focused on its opposition to this measure, but wants to work with the legislature to problem solve.
You can read the full letter in opposition to these proposals here.
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