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State senator says Seattle’s head tax would hurt his Issaquah business, others outside city

ISSAQUAH, Wash. -- For Zeek's Pizza in Issaquah, how many pizzas they sell could depend on Seattle’s vote on the employee tax.

“Here is a policy being enacted 20 minutes down the road that has a significant impact on my ability to sell pizzas,” said owner and state Sen. Mark Mullet, D-Issaquah.

Companies like his, the small ones, outside of Seattle are being overlooked, he argues.

After all, Seattle City Council members say the head tax is only against the largest companies within the city.

Under the proposal, the tax would be levied next year on businesses that have at least $20 million in annual gross revenue.  The companies would be taxed for each employee at a rate of 26 cents per hour, which could cost a company like Amazon $540 per employee a year in 2019 and 2020.

“The reality is we are talking about taxing the 3% of the largest companies in the city,” City Councilmember Kshama Sawant said.

“She’s divorced from reality,” Mullet said in an interview Thursday.

Mullet said those top companies employ the most people in the region, and many of them live in bedroom communities like Issaquah and dine at restaurants such as his.

“If you think for a half a second that these companies will not move to other parts of the country which are much more welcoming, you are wrong,” Mullet said.

That opinion from a businessman may not surprise many, but he is also a state senator.

“It goes against everything we are trying to do and I say that as a Senate Democrat,” Mullet said.

In Olympia, the slogan is often jobs, jobs, jobs.

“The Seattle City Council sends the opposite message, saying we are going to penalize you,” Mullet said.

He said it's the worst policy Seattle could impose and if they do, his solution will be to take statewide action by proposing state legislation in January to reverse the employee tax.

“It’s going to impact our state tax revenues, which prevents us from investing in affordable housing,” Mullet said.

So for the lawmaker, Seattle’s business just became his own.

Seattle Mayor Jenny Durkan on Wednesday said she didn't like what was on the table and is working to come up with a better deal, although she wouldn’t specify what a kind of compromise would work for her.

Mullet says it doesn’t matter how much they decrease the employee tax, he wants the whole thing scrapped. He said any amount would send the wrong message to businesses in the region.

He also says even if companies don’t pack up and leave, he predicts new businesses will stay away and existing ones will choose not to expand. He says growth will stall in Washington, making it the state’s business to intervene.

Seattle is not the only city to try a head tax, Chicago had one years back but then the mayor there scrapped it, calling it a "job killer." The cost in Chicago was $4 per employee a month, or $48 a year; Seattle's proposal would be as much as $540 per employee a year.

A City Council committee is expected to vote on the proposal Friday. If it has five votes it will go to a full council vote on Monday.