Tag: Paycheck Protection Program

Capital Gains Tax Opponents Received Taxpayer-Funded Aid

By Shauna Sowersby

Founders and CEOs from more than 120 Washington businesses that are members of the Washington Technology Industry Association recently sent a letter to state senators encouraging a “no” vote on SB 5096, a bill that would impose a 7 percent tax on the sale of long-term capital assets such as stocks, bonds and mutual funds valued at over $250,000.

While rejecting ideas for raising progressive revenue on a state level, at least 58 of the companies whose leaders signed the letter received taxpayer-funded benefits through the Federal Paycheck Protection Program.

Public records reveal that at least 58 of those companies who signed the letter received nearly $34 million in funding from PPP loans, a program established by the federal CARES Act meant to help small businesses stay afloat during the pandemic.

Public records reveal that companies such as ExtraHop Networks, FlyHomes, Widenet, and Neal Analytics received more than $1 million each from the program. Software publisher ExtraHop, which is headquartered in Seattle, received nearly $10 million in assistance, for example. ExtraHop did not respond to an email seeking comment. Several other companies whose leaders signed the anti-capital gains tax letter received over $1 million in loans, although many recipients were under that threshold. 

Another corporation that benefited from the federal loans also held a public fundraiser that raised $7.6 million. AstrumU, a Kirkland business that specializes in custom computer programming services, received nearly $600,000 from the PPP prior to the multi-million dollar fundraiser. 

Businesses that use their PPP loans as outlined by the Small Business Administration can have their loans forgiven.

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The WTIA argued in their letter to the senate that “a capital gains tax would penalize founders and their employees during an already unprecedented period.” Additionally, they added, “taxing those gains penalizes employees and encourages founders to form their companies in other states, or to relocate to states that do not have a capital gains tax.”

Only nine states including Washington do not have a capital gains tax.

Political think tank Civic Ventures argued in a response letter to the WTIA that their argument is “absurd,” stating that “California has the highest capital gains tax rate of any state in the country, vastly higher than what SB 5096 proposes, and has more tech start-ups than any other state.” (Full disclosure: Civic Ventures is one of PubliCola’s financial supporters).

Sponsored by Sen. June Robinson (D-38, Everett), the first $350 million in revenue raised by the tax would be put into the Education Legacy Trust Account to fund education in the state, while the remainder would be added to a new Taxpayer Relief Account. The highly debated bill is currently awaiting a floor vote in the Senate.

Lawyers, Car Dealerships, Burger Joints, Newspapers, and Strip Clubs: Which Seattle Companies Got Federal Loans

COVID-19 Relief Series, Part 2: Paycheck Protection Program ...


The Small Business Administration has published a list of the companies that received Paycheck Protection Act loans of more than $150,000, including thousands of Seattle-based for-profit companies, nonprofits, and religious institutions. (The low-interest loans convert into grants if they are used primarily to retain staff who might otherwise be laid off). The local list, which I’ve compiled into a Google spreadsheet, includes a wide range of companies, from large law firms to newspapers to Catholic schools to nonprofits.

The Small Business Administration, which administered the loans, lists loans as ranges, so I have described each loan as being “up to” the higher end of the range. You can download the full spreadsheets of loans over and under $150,000 on the SBA website; note that the list of loans under $150,000 does not contain business names or detailed business categories.

I took a look at the list of Seattle companies and put together a highly unscientific, non-comprehensive guide to highlights, lowlights, and oddities.

• As the New York Times and others have pointed out, large law firms, lobbyists, and car dealerships were among the biggest “small-business” loan recipients nationwide, and Seattle was no exception. Law firms receiving big payouts in Seattle include Foster Garvey (formerly Foster Pepper), which received as much as $10 million; Schroeter, Goldmark, & Bender (up to $2 million) and Stokes Lawrence (up to $2 million). Local mega-consulting form Strategies 360 received up to $5 million. And Bill Pierre Ford (up to $2 million), Carter Motors, and Freeway Motors (up to $5 million each) were just three of the 20 Seattle car dealerships that received federal loans, a number that does not include the much higher number of dealerships just outside city limits.

The owners of the McDonald’s at Third and Pine, a corner that has seen many shootings over the years (most recently in February, when a mass shooting killed one and injured seven), also received a loan of up to $5 million.

• Several local media companies received PPP loans, including the Seattle Times (which reported earlier this month that it had received nearly $10 million), the Stranger (which has not disclosed its loan of up to $2 million, and continues to solicit small donations from readers, saying they’ve lost more than 90 percent of their revenue), the Daily Journal of Commerce (which received up to $1 million) and Sagacity Media, which owns Seattle Met Magazine and received up to $2 million. Cascade Public Media, the umbrella nonprofit for KTCS 9 and Crosscut, also received up to $2 million.

• For reasons that are unclear, Red Mill Burgers, which is owned by two white siblings, listed itself as a Black-owned business, according to the SBA. (The racial designation is optional, and does not confer any particular advantage.) Red Mill was in the news several years ago after owner John Shepherd got in trouble for making sexist and transphobic comments and sharing transphobic cartoons. Specifically, he “stepped down” from his “role” at the company—without actually relinquishing control—after calling female city council members “bitches” for voting against a sports arena and posting transphobic memes on Facebook. Shepherd remains an active commenter on the anti-homeless Safe Seattle Facebook page. Red Mill received between $100,000 and $350,000.

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• Restaurants, which (along with hotels) were hard-hit by stay-at-home orders, ranked high among recipients of large and mid-range loans. Some notable beneficiaries include Duke’s Chowder House (up to $5 million); the Daily Dozen Doughnuts stand in Pike Place Market (up to $5 million); Matador, with branches in West Seattle and Ballard (up to $5 million); Salty’s, a seafood restaurant on Alki Beach (up to $5 million); two franchise branches of Din Tai Fung, the Taiwanese restaurant chain (up to $2 million); Renee Erickson, who owns nearly a dozen local sea creature-themed restaurants (up to $5 million); and the ultra-spendy Queen Anne destination restaurant Canlis (up to $2 million); and Dick’s Drive-Ins (up to $5 million).

Various business entities associated with restaurateur Tom Douglas, who shuttered all of his restaurants and laid off hundreds of employees in early March, will collectively receive loans of up to $4.35 million. The restaurants include some that are still open, such as the Palace Kitchen, Dahlia Lounge, and Serious Pie, as well as two that Douglas has closed permanently, Brave Horse Tavern and Cuoco. According to the SBA database, Douglas’ claimed that the federal loan of up to $1 million would allow Terry Avenue Restaurants, the corporate name for the two shuttered restaurants, to retain 92 jobs.

The owners of the McDonald’s at Third and Pine, a corner that has seen many shootings over the years (most recently in February, when a mass shooting killed one and injured seven), also received a loan of up to $5 million.

Rounding out the list of local burger chains, Kidd Valley and Burgermaster each received loans of up to $1 million.

Five corporations associated with Deja Vu strip clubs, not all of them incorporated in Washington State, showed up on the list and received a total of up to$5,350,000.

Some of the restaurateurs who will benefit from federal largesse have been in the news previously for stiffing workers or expressing anti-tax or anti-government views. Douglas, who just announced he will permanently close two of his restaurants near the Amazon campus, was among the most vocal restaurant-industry opponents of the “head tax” last year, and had to pay out a $2.4 million settlement for underpaying his employees last year. Dick’s Drive-Ins also came out against the tax, and its executive vice president, speaking on behalf of the company, suggested that charitable giving by individuals should replace government support for homeless services.

• A large number religious institutions (which are not taxed) received significant loans, among them the Corporation of the Catholic Archbishop of Seattle (up to $5 million), the Diocese of Olympia (up to $1 million), St. Anne’s Church on Queen Anne (up to $1 million), and about three dozen other churches or religious organizations. Private schools, many of them run by religious denominations, also received dozens of loans; Holy Names Academy (up to $2 million), St. Joseph School (up to  $2 million), and O’Dea High School, for example, received loans, as did private schools like Morningside Academy (up to $350,000) and charter schools like Summit Public Schools and Villa Academy (up to $2 million each).

The libertarian, anti-government Washington Policy Center—which rails against expansion of government programs to help vulnerable people and advocates for “free-market solutions” over government “handouts”—accepted a federal handout of up to $1 million.

• Local nonprofits that help people experiencing homelessness and food or housing insecurity also received loans to continue doing their work at a time when direct assistance has been especially critical. On the long list are Food Lifeline (up to $2 million), Solid Ground (up to $5 million), the Chief Seattle Club (up to $350,000), the Lighthouse for the Blind (up to $10 million), Asian Counseling and Referral Service (up to $5 million) and El Centro de la Raza (up to $2 million).

• Five corporations associated with Deja Vu strip clubs, not all of them incorporated in Washington State, showed up on the list and received a total of up to $5,350,000. According to the SBA, the five Seattle-based entities employ nearly 400 people.

One, Bijou-Century LLC, is registered in Nevada and owns a strip club in San Francisco that has been the source of several high-profile legal disputes, including a lawsuit against the software company Oracle over an unpaid five-figure tab. Another, S A W Entertainment Ltd., is associated with the Hustler and Condor strip clubs (both Deja Vu-affiliated) in San Francisco. The listed location for both entities is at 1510 1st Ave., the location of Fantasy Unlimited/Deja Vu Showgirls, but neither company is registered in Washington. And two more Deja Vu affiliates—BT California, which runs the Penthouse Club in San Francisco, and Deja Vu San Francisco LLC—are both listed at an address on Eastlake Ave. E. that is not the site of any strip club.

Only Seattle Amusement Co., also located at 1510 First Ave., is an actual Washington State corporation—it’s owned, along with the rest of the building that houses the Showbox nightclub, by local strip club magnate Roger Forbes, who started the Deja Vu company with Larry Flynt in 1985. The byzantine accounting (and the sleuthing required to find out where all these “Seattle” LLCs are registered) speaks to the difficulty of tracking where all the loans are going, even with the benefit of spreadsheets and the Internet. For what it’s worth,

Finally, the libertarian, anti-government Washington Policy Center—which rails against expansion of government programs to help vulnerable people and advocates for “free-market solutions” over government “handouts”—accepted a federal handout of up to $1 million.