Progressive Revenue Task Force recommends employee hours tax
The Finance and Neighborhoods Committee will review the recommendations of the Progressive Revenue Task Force during its next meeting at 2 p.m. Wednesday, March 14, in city council chambers at city hall. The council expects to vote on a legislative proposal later this spring. A copy of the full report can be found at the bottom of this article.
The Seattle City Council will once again consider an employee hours tax that’s being recommended by its Progressive Revenue Task Force, after having rejected such a proposal last November.
Rather than approving the proposal last year, which was projected to generate about $25 million annually by taxing businesses grossing more than $10 million annually 6.5 cents per employee per hour, the council decided to create the PRTF to further explore an employee hours tax, or head tax, and other possible new revenue streams.
The PRTF provides three options for an employee hours tax (EHT) in its recently published final report for generating $75 million in new revenue for creating affordable housing and providing emergency services. It provides several more recommendations for the city council to consider for generating another $75 million in new revenue for $150 million total, which the task force states is still grossly inadequate when dealing with the city’s homelessness crisis, but is a “solid start.”
“We note that there are no known data establishing that an EHT-like tax adversely impacts employment opportunities,” the March 9 report states, “and there are many data that show that business-friendly climates are jurisdictions that adequately address homelessness, fund quality schools, and maintain infrastructure necessary to move people and goods.”
The task force acknowledges it may be impossible to avoid all disproportionate impacts on employers, but that “must be weighed against the emergency of homelessness and housing insecurity whose devastating consequences impact tens of thousands of Seattle residents every day.”
The task force recommends revenue generated by a potential head tax be split, with 80 percent going toward generating housing, and the other 20 percent to fund emergency shelter and services.
“Considering the disproportionate impact of both homelessness and displacement on communities of color, we believe the City should encourage and support community of color organizations that are working to develop affordable housing,” according to the report.
Head tax options provided include gross revenue thresholds of $8 million and $10 million, but the PRTF recommends all employers in the city contribute, save for maybe those with businesses that generate less than $500,000 in revenue. For those employers whose businesses fall under a selected revenue threshold, the task force recommends a payment of $395 per year.
The task force does not recommend excluding most organizations and nonprofits, except those that are addressing affordable housing and emergency services that support those experiencing homelessness and housing insecurity.
“The City’s decision about funding shelter and services should be subject to a racial equity assessment, recognizing the need for culturally appropriate services and programs that specifically serve communities of color and people at the various intersections of marginalized identities,” the report states.
Other potential new revenue streams
In order to generate an additional $75 million over the recommended employee hours tax, the PRTF also recommends the City of Seattle consider a local estate tax, taxing exceptionally high compensation, a luxury tax on expensive property purchases and reinstating the City Growth Fund.
The task force cites Portland’s “Pay Ratio Surtax” when proposing a tax or similar fee when a CEO-to-worker pay ratio exceeds 100-to-1, and New York City’s “Mansion Tax” when recommending the city lobby the Legislature for authority to impose a .25-1 percent tax on luxury homes costing more than $1 million or second home purchases. The PRTF also recommends finding ways to tax speculative real estate investments and vacant or unoccupied properties.
The City Growth Fund was created by the Seattle City Council in 1985, and ended in 2002. The task force recommends reestablishing the fund citywide.
“The Growth Fund used a set formula to calculate the amount of funding generated from property tax revenues tied to new construction downtown and used that revenue to acquire and rehabilitate existing low-income housing that was at risk of being redeveloped and to develop new low-income housing,” the report states.
Report of the Progressive Revenue Taskforce 03-09-2018 by branax2000 on Scribd