Seattle Companies to Pay Annual Tax of $275 per Employee

The new Seattle tax aims to combat the homelessness crisis.

Seattle’s City Council voted unanimously on Monday to pass a new tax of $275 a year for each employee of a for-profit company that grosses $20 million or more in the city.

The bill is the culmination of a long struggle and a compromise after Mayor Jenny Durkan had previously promised to veto the initial proposal of $500 per employee per year.

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Seattle Tax Intended to Address Homelessness Crisis

The new tax is a response to the homelessness problem in Seattle, which declared a state of emergency in 2015 and last year counted some 11,600 homeless people in King County. What’s more, one in 16 students at Seattle public schools is homeless.

“Today, we took an initial step forward to reduce homelessness, build safer communities and toward a city that allows people who work in Seattle to afford to live in Seattle,” said council member Teresa Mosqueda in a statement released after the vote. “We have a homelessness and housing affordability crisis in Seattle, our shelters are at capacity and there is not enough affordable housing for folks to move into.”

The tax will ultimately affect 3 percent of Seattle businesses and raise close to $47 million a year.

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Rising Costs, Lack of Housing Driving Desire for Change

The homelessness crisis in Seattle appears to have pitted the city’s residents and homeowners against some of its largest businesses.

Amazon, the city’s largest employer, threatened to pause a planned expansion of a skyscraper that would house 7,000 employees over the proposed tax on May 2, prompting an outpouring of anger at a town hall meeting held that night. The debate ultimately resulted in reducing the size of the tax from $500 per employee to $275, with council members working past midnight on Sunday to finalize the deal.

Rising cost of living could be one of the major culprits for the city’s growing issues with housing and homelessness. Last year saw a 12 percent increase to the city’s cost of living — the seventh highest among major U.S. cities, according to a GOBankingRates study — including a 4.6 percent year-over-year jump in rent and a 9.2 percent change in home prices. Two separate GOBankingRates studies also found that the city’s median home list price sits at $688,000 — a price tag that over half the city’s residents can’t afford — and that living comfortably in the Emerald City requires an income of over $75,000 a year.

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