Many states have an east versus west or urban versus rural divide on policy issues. In Washington state, it’s more like Seattle versus the entire 71,000 square miles of the rest of the state, and nowhere is this difference more pronounced than in the tax policy arena.
In 2017, this is showcased in just the sheer number of new taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. proposals coming out of the Seattle city council and from mayoral candidates. Here are the proposals we’ve seen gain traction so far (proposals that already passed are noted):
- A tax on sugar-sweetened beverages at a rate of 1.75 cents per gallon, or $1.18 per two-liter bottle (passed June 5, 2017)
- A city income tax that is almost certainly illegal (passed July 10, 2017, but still facing a court challenge)
- A short-term rental “Airbnb” tax of $10 per night
- A 4.8 cent-per-employee-hour-worked tax on the high-grossing businesses in the city (about $100 per employee per year)
- A 5 percent hike in the city’s parking tax, from 12.5 percent to 17.5 percent
- A tax on foreign buyers of Seattle homes (advanced by mayoral candidate Cary Moon)
- A “luxury real estate tax” on transfers of homes over $1 million (also a Moon proposal)
The state of Washington has a tax system with many admirable features, especially its lack of an income tax, but this deluge of city proposals is likely to make prospective businesses wary. In the case of Amazon, which is already headquartered in Seattle, company leaders are seeking an expansion elsewhere. Depending on how many of these taxes are advanced, businesses might be better off in another state—or maybe just across the lake in Bellevue.
Erratum: an earlier version of this blog post stated the proposed head tax‘s rate at 8 cents per hour.
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