Seattle Chamber Sues Over 'JumpStart' Big Business Tax

SEATTLE — The Seattle Metropolitan Chamber of Commerce has filed a lawsuit seeking to block the city's "JumpStart" tax as unlawful. The tax, passed in July, is tailored for the highest salaries at Seattle's largest companies and estimated to raise $214 million annually.

The Seattle City Council approved the new tax on big businesses by a 7-2 margin, and it took effect without Mayor Jenny Durkan's signature. The final 2021 budget relies heavily on the projected revenue from the tax to help offset steep declines in revenue elsewhere resulting from the coronavirus pandemic.

Unlike the 2018 head tax, which was unanimously approved then overturned after immense pressure, the JumpStart tax is more specifically targeted. The payroll tax rates range from 0.7 percent to 2.4 percent and apply only to salaries for employees making more than $150,000 annually. The highest end of the tax applies only to companies with $1 billion or more in payroll and only on employee earnings of $400,000 or more.

The suit claims the law was rushed and oversteps the city's authority by unlawfully taxing "the right to earn a living." Despite not applying to small businesses, the Chamber argues the tax will have wide ramifications and slow the post-pandemic economic recovery.

"Our downtown core, where we had over 300,000 people coming to work and supporting small businesses every day, is still reeling from the economic shock of the pandemic," said Alicia Teel, a senior vice president at the Chamber. "This illegal payroll tax threatens to drive out the very jobs that create the revenue the city is hoping to restore."

In 2021, $86 million is set aside for community investments, COVID-19 relief programs, and funding essential city services that would otherwise face steep cuts amid a projected revenue shortfall in the hundreds of millions. In 2022, revenue from the tax is earmarked for the construction of new affordable housing and millions to support local businesses and economic stability.