By Erica C. Barnett
This week, we’re talking taxes—specifically, the new business and occupation (B&O) tax proposal that City Councilmember Alexis Mercedes Rinck and Mayor Bruce Harrell dropped, seemingly out of the blue, last week. The tax includes a big exemption that the business community has been seeking for a long time; however, above that threshold—$2 million in gross receipts—the tax will go up substantially.
Because B&O taxes are based on gross receipts, they hit high-grossing, low-margin businesses like restaurants and grocery stores hardest, often leading to higher prices—which is one reason they aren’t generally considered progressive. In fact, neither of the groups the city set up to come up with new progressive revenue sources recommended a higher B&O tax.
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On Monday, as I was posting the podcast, I received a poll testing messages for and against the tax measure. The Seattle Metro Chamber of Commerce is pushing the message that higher B&O taxes will drive up prices and drive larger businesses out of Seattle. “If the City continues to drive away large employers, it will create a domino effect hurting the small businesses this plan is supposed to help while also causing unemployment to rise, office vacancies to increase, and tax revenue to shrink,” one of the test messages claimed. The Chamber is also using some dodgy math to claim that the city has more than $500 million just sitting around, up for grabs, so expect to hear that message when this thing goes to the ballot.
So what’s really behind the new proposal? The mayor’s up for reelection, facing a progressive challenge from Katie Wilson. Seattle’s facing a budget hole of $250 million even without federal cuts. And supporters of the tax measure may be gambling the Chamber won’t fight too hard against the tax, because it includes a big tax exemption that small- and medium-size businesses have been seeking for years.
With David still away gamboling in parts unnamed, Sandeep and Erica take up these questions and more on this week’s episode of Seattle Nice.
An odd teamup indeed.