Chamber of Commerce Sues City of Seattle for Imposing ‘tax on the right to earn a living’

On Tuesday, December 8, the Greater Seattle Chamber of Commerce filed a lawsuit against the City of Seattle for “unlawfully imposing an unconstitutional tax on the right to earn a living.”

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The suit says that “amid one of the most severe financial crises the City has ever experienced” the Seattle City Council passed a bill that imposes a “payroll tax” on employing workers in the city all “while Seattle businesses reel from the havoc wreaked by the COVID-19 pandemic”.

The suit notes that the bill in question was returned to the City Council “unsigned by the mayor” of Seattle and thus became “Ordinance 126109”. 

The suit alleged that “The Ordinance’s drafters carefully avoided the word “wages” in nominally characterizing the Ordinance as imposing a tax on “every person engaging in business within Seattle.”… In substance and in truth, the Ordinance’s taxable incident is the right to earn a living—which the Washington Supreme Court has already ruled cities may not do.”

The Chamber of Commerce says that “more than 200 stores and businesses have shut down permanently” due to the pandemic, which has resulted in tens-of-thousands of jobs being lost. 

They argue that “Adding a new tax on jobs creates another headwind that could prove fatal to the recovery of downtown Seattle and the local business community.” 

The Chamber alleges that the City Council “Instead of carefully evaluating the City’s spending and its $1 billion-plus general fund,” choose to rush “to pass a new illegal tax devoid of any spending accountability.”

“The tax is illegal, punitive, and fails to address the most pressing issues facing the City.”

The lawsuit calls the tax the Council is pursuing a “punishment-driven strategy” that discourages investment in the city. 

The passed Ordinance would come into effect in January 2021 and establishes “a payroll expense tax on persons engaging in business in Seattle”. 

The initial ordinance was recommended by the council ‘Progressive Revenue Task Force’ that “recommended that the City seek to collect $75 million from a new employee hours tax, a new payroll tax, or both to address homelessness and affordable housing;”.

The Council says the “new tax will generate significant funds that will increase the construction and preservation of new permanently affordable housing units for low-income households to address the housing affordability and homelessness crisis, will contribute to reducing Seattle’s climate pollution, and will in the process support living-wage jobs, and in doing so will help the City make the necessary changes to shift Seattle’s economy to be more equitable and ecologically sustainable”.

In recent months, the Seattle City Council has come under fire due to some of its council members, notably Kshama Sawant, advocating for bills like the “Solidarity Budget” which also went by the tagline “No New Cops”.

The bill calls for defunding the Seattle police department and giving more oversight control to the city council. 

The Seattle Times notes that while “demonstrations were roiling Seattle in July, most council members agreed the Police Department should be “defunded” by 50%, with the money diverted to other needs.”

However, since then, some council members have backtracked on their initial policy commitments to pursue policies that would ‘defund the police’ and other similar policies directed at the Seattle Police Department and opted to reduce the police departments budget by 17%

Councilmember Sawant went to Twitter to rail against other members for not passing the “No New Cops” bill.

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