Opinion: Proposed ‘head tax’ isn’t just a bad idea — it’s illegal

By Sen. Mark Schoesler, Apr 20, 2018, Printed in the Puget Sound Business Journal

I’m not sure why the Seattle City Council has it out for the hardworking people who live and work in the city.

Recently, Councilmember Kshama Sawant held a rally downtown in support of a new tax on Seattle’s large employers. It’s the latest arrow in the “tax-til-you-drop” quiver the council has been using in its attack against…well, everyone.

That quiver has been overflowing with tax propositions that make Seattle too expensive to live in, do business in and visit – on top of making false promises.

Backers of the soda tax, for example, claimed it would motivate people to make healthier choices. The city assured voters that they wouldn’t even see the tax because it would be levied not against them, but against distributors.

How’d that work out? Basic economics intervened, and the industry passed the expense along to the consumer. The people are paying it.

In rebellion, Costco posted signage detailing how the tax inflated its soda prices and encouraging people to shop outside Seattle. This would not only cost the city the new beverage tax, but also sales tax from other items people would have put in their carts. Seattle was biting off its nose to spite its face.

And that’s exactly what this new “head tax” on large employers would do.

Taxing a company based on its number of employees, the hours they work or the wages they are paid is incentive for that company to let people go, curtail hiring, cut hours and reduce wages. Or simply leave town.

The Seattle Metropolitan Chamber of Commerce and other local employers call this rogue and reckless approach a “tax on jobs” – jobs that are critical to the economic health of the region.

Several companies have already left Seattle or say they’ll follow suit, citing the growing costs of doing business as a key reason for their exodus.

High business and occupation taxes, the ST3 property tax, the soda tax, an increase in sales taxes, per-employee taxes on large employers, the threat of an income tax and even a tax to drive Seattle’s roads — all are reasons to leave.

Add in that employees can’t afford to live in the city where they work because rents are skyrocketing and pushing housing out of reach, especially for those who could get a pay cut or a pink slip because of new taxes.

The council claims its head-tax goal is to reduce homelessness. But can it prove the money already budgeted for that purpose is spent effectively before taking action that could increase homelessness by costing people the wages they need to afford housing? Someone needs to give more thought to unintended consequences than the Seattle City Council does when it unveils the “tax of the week.”

What’s more, the council doesn’t even have the explicit authority to impose all the taxes it wants.

That’s right — cities have no inherent authority to levy local taxes unless it’s expressly delegated by the Legislature or Washington’s Constitution. Also, the state’s authority over taxation includes the ability to restrict local taxing authority. An example is how state law prohibits local business taxes on the sale of motor vehicle fuel and insurance.

Next year I will make sure legislation is introduced to explicitly prohibit local governments from taxing businesses on a per-employee basis. Clearly, local politicians need reminding that under the state constitution, taxing authority must be granted by the state to local government.

The ringleaders of this pro-tax, anti-worker agenda appear to have nothing but their own political benefit in mind. Meanwhile, companies that employ hundreds or thousands of Washingtonians must make bottom-line decisions that may lead to opening new plants or headquarters elsewhere in North America. If they do, the jobs the Seattle City Council is taking for granted would go with them.

2018-05-15T15:42:20+00:00 April 20th, 2018|General|0 Comments

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