Seattle business community ‘alarmed’ by suggested new tax, association says

SEATTLE -- There’s talk of a suggested new tax to help solve the homeless crisis in the city of Seattle.

If the idea gains steam, it would impact Seattle businesses. And some business owners say that could trickle down to the customer.

Tayna Rachinee opened her Ballard restaurant, Root Table, in 2012 and has two full-time employees and seven part-timers. She says she really can’t afford any more taxes.

But she might have to pay more as a business owner after the Progressive Revenue Task Force released its final report, exploring options like an Employee Hours’ Tax to help address homelessness in Seattle.

Members of the task force recommend $150 million in new “progressive revenues” be collected each year; $75 million of that would come from an Employee Hours’ Tax, also known as a “head tax”, where most businesses would have to pay a few cents for every hour worked by their employees.

Jon Scholes, president and CEO of the Downtown Seattle Association, says this is bad news for growth.

“The issue of homelessness is not a Seattle problem alone," he said. "We need to be thoughtful about a countywide, regional approach.

"The City Council is going to hear from a lot of businesses over the next several weeks. We are getting lots of phone calls and emails from folks who have seen their utility rates go up, they’ve seen their property taxes go up, they’ve seen the wages for employees go up because of the city minimum wage requirements. So the business community is alarmed by this proposal,” Scholes said.

Emily Parkhurst, with The Puget Sound Business Journal, says a tax like this could be a big blow to the medium-sized business.

“Particularly when you talk about the middle of the market, this is a segment of business that Seattle has really struggled to grow. We have a lot of really large companies in the Amazons of the world and we have a lot of great start-ups and smaller businesses, there’s just not a lot in the middle there and a lot of those middle companies struggle with profitability and so taxes like this can have a real impact on them,” says Parkhurst.

While Rachinee says she’s happy to help her community, she’s trying to make ends meet.

“If I need to get everything to stay the same, I would have to increase the price of the food just to make up for the tax. I have to keep this business alive,” says Rachinee.

We tried reaching out to several members of the task force and City Council for comment, but have not heard back yet.

According to a city press release, the council intends to begin developing and deliberating legislation in the coming weeks and expects to vote on a legislative proposal later in the spring.