SEATTLE — A new proposal to lower taxes for most businesses in Seattle could be coming to voters later this year. Mayor Bruce Harrell and Councilmember Alexis Mercedes Rinck announced the plan that would raise the city’s business and operating tax exemption from $100,000 to $2 million. The mayor’s office estimates that this would exempt 76% or around 16,500 businesses from the tax. An estimated 90% of businesses would see their tax bill reduced because of the change.
To pay for it, the city would increase the B&O tax rate, meaning the businesses in the top 10% of revenue would be paying more. Businesses in retail, wholesale, and manufacturing sectors would see taxes increase from 22 cents per $100 of taxable receipts to 34 cents per $100. Service company B&O taxes would increase from 43 cents per $100 to 65 cents per $100 for service companies.
“We’re not asking everyday taxpayers to unfairly shoulder this burden, we’re asking the largest corporations to pay their fair share while reducing the tax burden for medium and small businesses. We’re asking them to contribute to the community that made their success possible,” said Councilmember Rinck.
Harrell’s office estimates that a business with $5 million in receipts would pay around $1,200 less in taxes. A business with $12 million would pay $7,667 in taxes.
The Seattle Downtown Association says this could make things worse for the Downtown District.
“This proposal is a tax on downtown Seattle’s revitalization and a self-inflicted wound to the progress we’ve been making to attract more businesses downtown and strengthen the city’s tax base. It will make it harder to fill empty tall office buildings and storefronts with companies, which will threaten the commercial tax base and shift more of the tax burden to residents.”
Several restaurants, especially from the Chinatown International District, were at the announcement on Wednesday, like Eric Chan of Jade Garden. Chan points to raising food prices, especially eggs, as well as increasing rent, which have cut into any profit the family’s business has had. They pick up food, supplies, and equipment themselves in order to continue to pay staff and stay open.
“Margins are very slim,” Chan said. “Costs of operations are very high, so we do everything we can to cut costs, maximize efficiency for our customers. With a tax break, that’s essential.”
Chan expects to be able to provide a bonus or other benefits for employees if the tax goes through. Thanh-Nga Nguyễn of ChuMinh Tofu says she’d be able to make needed changes as well.
“If this passes, we can reinvest in our employees, expand our hours or services, maybe—just maybe—we can take a break,” Nguyễn said.
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