On Monday, July 6, the Seattle City Council passed the much anticipated JumpStart act, championed and written by councilwoman Teresa Mosqueda. The new tax on larger businesses with high-paid employees will help provide relief during Seattle’s COVID-19 recovery and create more affordable housing moving forward.
Larger companies that have more than $7 million in their annual payroll will be taxed an amount based on how many employees they have with annual salaries exceeding $150,000. Huge companies with billion-dollar payrolls will pay a substantially larger share of taxes for higher wage-earning employees. The newly enacted tax rate will range from 0.7% to 2.4%, depending on payrolls and individual employee income.
The tax wouldn’t go into effect until 2021, but Seattle could start using its emergency and rainy day funds for coronavirus relief and would use revenue from the JumpStart tax after it is enacted to replenish those funds.
The Seattle City Council estimates that JumpStart would raise about $86 million for COVID-19 relief and other services. The business tax will generate more than $200 million annually for housing, local business assistance, and community development.
The legislation ultimately passed by a 7-2 margin. Mosqueda was joined by council members M. Lorena González, Tammy Morales, Lisa Herbold, Kshama Sawant, Andrew Lewis, and Dan Strauss in voting for the new tax.
Councilwoman Mosqueda issued a statement on July 5 in anticipation of the passing of JumpStart, saying, “We’re in the midst of a public health pandemic and an economic crisis, and JumpStart is part of the remedy. This is the antidote or part of the antidote needed to respond to the public health crisis of COVID and the economic instability that COVID has exposed in our local economy. JumpStart is part of the solution needed to deeply invest in affordable housing, equitable development, and a more resilient economy. JumpStart injects resources into the social safety net harmed by decades of underfunding in housing and health services. In the midst of a pandemic, housing insecurity isn’t just a moral crisis. It’s a public health crisis.”
The JumpStart payroll tax will begin on January 1st, 2021. It will end on December 31st, 2030.