New 'head tax'? Proposed law would let King County tax large businesses to tackle homelessness

There’s a new attempt to help fund efforts that tackle homelessness in the Puget Sound region by taxing large businesses.

A new measure introduced in the Washington state Legislature Wednesday would allow King County to impose a tax of 0.1 to 0.2 percent on businesses on the total payroll of employees who earn $150,000 per year or more.

The money would have to be used to pay for homelessness services, affordable housing, public safety, and behavioral health services.

If passed, House Bill 2907 could allow the county to raise approximately $121 million per year, according to the King County Executive's office.

State Rep. Nicole Macri, D-Seattle, is sponsoring the bill. She said the intent is to provide a new tool at the regional level to help address homelessness.

“Right now, business taxes are authorized by the state at the city level but not at the county level,” Macri said.

“Through conversations, large employers and local elected leaders have come together and said, 'maybe we need more tools that can be used at the regional level.'”

Macri said the measure allows large employers with the highest earners to be taxed.

The bill exempts some businesses, including grocery stores, motor vehicle fuel businesses, and government entities.

Small businesses with 50 employees or less are also exempt, as long as the majority of those employees make below $150,000 per year.

The Seattle Metropolitan Chamber of Commerce said in a statement they would evaluate the proposal to “determine whether it would be smart public policy that can achieve its desired outcomes, and assess how it would affect our broad, diverse business community.”

In a joint statement, Seattle Mayor Jenny Durkan and King County Executive Dow Constantine applauded the effort. They have, according to Macri, been heavily involved in championing the measure.

“Our region is working every day to tackle homelessness and increase the production of affordable housing, but we know that we must do more. We thank legislators in Olympia for recognizing that regional need, and for bringing forward a progressive new funding tool for King County – and we encourage them to act with urgency,” the statement said.

“This crisis demands more tools for the region outside of property and sales taxes. Many of the region’s largest businesses, with deep roots in our community, want to participate in solutions,” it continued.

The state measure specifically targets King County, as it would only authorize counties with populations exceeding two million to impose the tax. No other county in the state reaches that threshold.

The bill is reminiscent of a 2018 ordinance passed and then quickly repealed by the Seattle City Council.

The so-called "head tax" was highly controversial in Seattle at the time and drew opposition from critics, including Amazon.

King County is home to several large businesses. In a statement, Expedia Group chief legal officer Bob Dzielak said addressing the regional homelessness crisis reflects the values of their employees in the Seattle region.

“Our roots are firmly planted in the Greater Seattle area and we are proud to contribute toward the revenue needed to address these issues in the form of a new tax that can make a meaningful impact, creates accountability to drive progress, and quickly gets the needed funding in the hands of our local policy makers in and beyond Seattle as swiftly and responsibly as possible,” the statement said.

Amazon has yet to publicly comment on the proposed new measure. Microsoft did not respond to a request for comment by publication time.

King County Council vice chair Reagan Dunn was swift to criticize the move.

“This renewed effort to tax jobs is a political zombie stumbling back from the graveyard of bad ideas,” Dunn said in a statement.

“This proposal is just Seattle’s failed head tax with a new coat of paint, the only difference is the original disincentivized job creation in Seattle and this version disincentivizes higher wages for the entire county.”

Macri , the bill's sponsor, said her measure differs from the tax previously considered in Seattle because it’s not a per employee tax, but a tax that’s exclusively on the payroll related to the highest earners in the region.

A hearing on the bill is expected to take place next week. The measure doesn’t currently have any Republican sponsors.