The corridors of Seattle City Hall are buzzing with renewed debate as Councilmembers Tammy Rinck and Joy Harrell unveiled an ambitious proposal Wednesday that could fundamentally transform how the city funds its essential services. The plan aims to overhaul Seattle’s business tax structure, shifting toward a more progressive model that would place greater financial responsibility on the city’s largest corporations while potentially easing the burden on smaller enterprises.
According to the proposal, businesses with annual revenues exceeding $500 million would face increased tax obligations, while approximately 93% of Seattle businesses – primarily smaller operations – would see their tax liabilities decrease or remain unchanged. This represents one of the most significant attempts to restructure the city’s tax system in recent years.
“Seattle’s current tax structure simply doesn’t reflect our values as a progressive city,” Councilmember Rinck told reporters at yesterday’s press conference. “We’ve created a system where neighborhood businesses struggle while some of our largest corporations pay proportionally less of their fair share.”
The timing is hardly coincidental. Seattle faces a projected $236 million budget deficit for 2025, according to figures released by the City Budget Office last month. Without intervention, this shortfall could force painful cuts to essential services including parks, transportation, and homeless response programs.
The Seattle Metropolitan Chamber of Commerce has already signaled its concerns. In a statement released hours after the announcement, Chamber President Rachel Smith cautioned that “while we support equitable taxation, any proposal must be carefully evaluated for its long-term economic impacts on job creation and business retention.”
The proposal arrives amid a complex economic landscape. Seattle’s post-pandemic recovery has been uneven, with tech sector resilience contrasting sharply against struggles in retail and service industries. Data from the Puget Sound Regional Council shows downtown foot traffic still lagging 22% behind pre-pandemic levels, creating challenging conditions for small businesses in the urban core.
Economic policy experts offer mixed perspectives on the potential impact. Dr. Margaret Williams, Economics Professor at the University of Washington, believes the approach has merit but comes with risks. “Progressive business taxation can create more stable revenue streams and reduce regressivity,” Williams explained in our interview. “However, the mobility of large corporations means there’s always the possibility of business relocation if they perceive the tax environment as unfavorable.”
The political calculus appears increasingly complex. A recent EMC Research poll commissioned by the Northwest Progressive Institute found that 68% of Seattle voters support increased taxation on large businesses to fund essential services, suggesting potential public backing for the measure.
Seattle’s tax history provides important context. The city briefly implemented an “Amazon tax” in 2018 before quickly repealing it under pressure from business interests. More recently, the JumpStart tax on high salaries at larger companies has generated substantial revenue but remains contentious in business circles.
The proposal’s fine print reveals a tiered approach to business taxation. Companies with revenues between $500 million and $1 billion would see moderate increases, while those exceeding $1 billion would face the highest rates. Importantly, businesses grossing under $500,000 annually would receive tax relief – potentially benefiting thousands of local establishments.
City Budget Director Julie Dingley has indicated that if implemented, the restructured tax could generate an estimated $175 million in additional annual revenue, addressing a significant portion of the projected deficit while potentially allowing for expanded investments in affordable housing and public safety initiatives.
Councilmember Harrell emphasized the proposal’s alignment with broader economic justice goals. “This isn’t just about balancing a budget,” she noted. “It’s about building an economic framework that supports our small businesses while ensuring our largest corporations contribute proportionally to the community infrastructure from which they benefit.”
Critics, however, warn of potential unintended consequences. Jason Miller, director of the Seattle Business Alliance, cautioned that “creating a business climate perceived as hostile to growth could undermine the very tax base we’re trying to strengthen.” He urged a more collaborative approach involving all stakeholders.
The path forward includes multiple public hearings scheduled throughout July, with the Council potentially voting on the measure by early September – just in time for incorporation into the 2025 budget planning process.
For everyday Seattle residents, the stakes are considerable. The tax restructuring could determine everything from the frequency of bus service to the responsiveness of emergency services and the maintenance of neighborhood parks.
As Seattle wrestles with questions of equity, sustainability, and fiscal responsibility, this proposal represents more than a tax adjustment – it reflects fundamental questions about what kind of city Seattle aspires to be and who should bear the costs of building that future.
The coming weeks will reveal whether this bold initiative gains the momentum needed to reshape Seattle’s financial landscape or joins previous attempts that faltered amid the complex interplay of politics, economics, and competing visions for the Emerald City’s future.
