Update on the state legislature’s proposal to allow a King County payroll tax

By: Editorial Staff Posted: 02/14/2020

Working to understand the impacts on our members

We want to update you on the work we are doing to advocate for you on Substitute House Bill 2907, which would allow King County to enact a payroll tax on businesses located within the county.

We believe that the conversation about generating revenue to support a regional plan to build more affordable housing and help lift people out of homelessness should happen at the state and county levels. These are regional problems that no single city can solve on its own.

We also know that our business community cares deeply about solving those problems and has a role and responsibility in doing so.

However, before the Chamber takes a position on the proposal, we want to have a clear understanding about how the proposed tax would impact ALL of our members in King County -- large and small, for-profit and non-profit, and across a wide variety of industries.

Our external relations team has been working with our members to analyze the legislation, including our member-led Policy Leadership Group, tax lawyers, our state lobbyist, and other partners. Based on that careful analysis, we still have four key questions about the proposal in the state legislature:

  • Will this legislation include strong preemption language that prevents cities from levying new payroll or head taxes if there is a King County payroll tax?
  • What is the definition of business and which businesses would have to pay the proposed tax? While supporters have claimed that this is a tax on large businesses, the current bill would subject non-profits and many small businesses to the tax.
  • Who would receive the revenue generated from the tax and how would it be disbursed across the county? We have reiterated the importance of a plan for how new revenue would be spent to address our housing and homelessness problems. Will funds be distributed equitably to the county and municipalities throughout the county?
  • Will raising taxes on business result in more net resources to address these issues? The legislation should include guardrails to ensure that new revenue is used to fund additional housing or services and cannot be used to replace existing funding.

This bill is moving quickly through the legislative process in Olympia and the language is likely to change over the next week. For the bill to stay alive, it needs to pass out of the House of Representatives by February 19.

As it continues to move, we are on the ground in Olympia talking to legislators and other stakeholders at the negotiation table to try to get answers to these questions.

We will keep you updated as we get answers to our questions and consider our positioning on the bill. If you have questions, please reach out to Dominick Martin, our vice president of external relations at dominickm@seattlechamber.com.