The Bellevue Chamber of Commerce is restating its opposition to a proposed statewide payroll tax following new legislative proposals that would exempt employers already paying Seattle’s local JumpStart payroll tax.
Under the proposal, companies that pay Seattle’s JumpStart tax would not be required to pay the new state payroll tax. Employers in other cities, including Bellevue, would be required to pay the tax to the state.
Joe Fain, president and CEO of the Bellevue Chamber of Commerce, said the structure of the proposal would result in businesses outside Seattle contributing payroll tax revenue while Seattle employers would be exempt.
“In practical terms, this means taxpayers and employers from every corner of Washington would be directly subsidizing the City of Seattle’s budget,” Fain said. “Seattle would keep the revenue it raises locally, while payroll tax dollars from businesses in Bellevue and communities across the state would be turned over to the state. Despite not paying the tax, Seattle would still receive the benefit.”
Supporters of the proposal have said the exemption would prevent Seattle-based companies from being placed at a competitive disadvantage.
Fain said the exemption reflects concerns about the impact of Seattle’s local tax policies.
“It is telling that Seattle legislators openly acknowledge that their tax policies are driving jobs and investment out of the city,” Fain said. “But the answer is not to export Seattle’s problem to the rest of Washington.”
The Bellevue Chamber also pointed to broader economic conditions in its opposition. According to the Tax Foundation, Washington ranks 45th among states for overall tax competitiveness. The Washington State Economist has projected flat employment growth over the next several years, and Moody’s has identified Washington as one of a small group of states at high risk of economic recession.
The payroll tax debate is taking place as lawmakers continue to look for ways to address a projected state budget shortfall. Senate Democrats are considering several revenue options, including a potential income tax on high earners and renewed discussion of a wealth tax.
Rep. Shaun Scott, D-Seattle, has proposed a statewide payroll tax modeled in part on Seattle’s JumpStart tax. His proposal is intended to raise more than $2 billion annually for education, health care, and human services. Scott has said the funding would help offset expected reductions in federal support following the passage of H.R. 1 earlier this year.
In December, Scott introduced the Well Washington Fund proposal, which he said is designed to protect working families and maintain public services amid federal funding changes.
“Washington needs a tax system that supports growth and opportunity in every community, not one that privileges a single jurisdiction at the expense of all others,” Fain said.
The Bellevue Chamber said it is open to working with lawmakers on alternative solutions.
