The GSBA Blog

GSBA Concerns About New Jobs Tax

by GSBA Staff
| Apr 17, 2020
This letter was sent to the Seattle City Council and Mayor's Office on April 14.

Members of the Seattle City Council - 

GSBA, as you know, is our state’s LGBTQ chamber of commerce with over 1,400 mostly small business members. Programs of GSBA include Travel Out Seattle (focusing on the tourism and hospitality industries) and the Capitol Hill Business Alliance (representing all small businesses in Capitol Hill). At the moment, over 80% of our members are in crisis during this pandemic. Every day, our staff reaches out to members to hear heartbreaking stories of folks losing everything that they have worked their lives to build. GSBA appreciates all the City is trying to do to support small businesses, including the Stabilization Fund and setting up a Small Business Recovery Task Force. We know you care about our community and are deeply committed to ensuring our community will survive this health crisis. 
That is why many at GSBA have been frankly shocked to learn about the reintroduction of one of the most divisive issues in recent City history. Just when businesses across the country are struggling to survive and when our amazing federal delegation is fighting hard to keep people employed and to support the survival of our small businesses, the City of Seattle appears to be taking the opposite approach and attacking either businesses teetering on the edge of survival or enacting harsh punitive measures against those few who are actually still able to pay and support their workers.

We are not yet even to the worst part of the economic crisis, and already the City Council is considering policies that will place further unsupportable hardship on some of the businesses who can least afford it. Most businesses in the hospitality industry - including restaurants and hotels that would be covered under the proposed tax - have lost all of their revenue and had to lay off most of their staff. Basing a tax on their 2019 payroll - a banner year - and applying it to 2020 - the worst year in memory - is frankly appalling. As unemployment in Washington State surpasses half a million people, do we even for one moment want the largest employers to reconsider their investment in our community? Having those large employers maintaining payroll, donating to restaurant workers, supporting small businesses and hourly workers,  shipping needed medical supplies and food is paramount to our survival.

GSBA is not an anti-tax business organization. We remain the only chamber of commerce  to support and actively fight for a statewide income tax to fix the most regressive tax structure in the United States. We strongly supported the unsuccessful efforts at the state legislature this year to create a county-wide tax that had strong buy-in, strong accountability, was written with the input of those being taxed, and would have provided a tremendous number of resources to solve a regional problem. We have supported the increase in the state minimum wage, and numerous policy proposals to strengthen workplace protections. With that in mind, we respectfully suggest the following: 

1. Please do not take up this issue while our economy is still in free-fall. With the economy is such flux, planning new taxes during the middle of a crisis when we do not even know where we will be in a few weeks is dangerous. Entire sectors of the economy already sustained enormous losses nearly overnight, and what they will look like in weeks or months is not yet known. For example, the tourism industry alone has practically collapsed, which has hit hotels, airlines, Expedia, and so many more companies and their employees. Other, larger, companies such as Starbucks, have also been severely impacted yet has committed to continuing to pay many of its employees and contractors even while they are not working. We believe that adding a tax to entities that have - so far- managed to stay afloat, is extraordinarily counterproductive and seems punitive. Punishing businesses while they are navigating unknown waters is perilous for the economy. The goal should be to find ways to enable the economy to resume quickly and nimbly as soon as possible. 

GSBA is committed to working with you to find revenue solutions when the economy settles and when we have moved from crisis mode to recovery.

2. Please focus your attention on the needs of the small business that need public assistance. We acknowledge the limitations due to Washington’s constitutional prohibition on gifting public money to private businesses, but our City needs to help find a constructive way to support our neighborhoods. Small businesses are key to supporting our communities. Many small businesses provide goods and services to larger companies. Thus, while the proposed tax is currently targeting companies that have a payroll of at least $7 million, the reality is the dollars spent on taxes at this moment in time are dollars that will not be spent on goods and services that will keep the economy alive. The efforts on Monday to prevent commercial tenants from being evicted is a good example of this, and we thank you for your action.

3. Please start planning for how all parts of our City will recover from this humanitarian crisis. We know that everyone is hurting right now, and that times will be bad for the foreseeable future. All levels of government, like the economy, will experience catastrophic drops in revenues and will be forced to make painful sacrifices. A tax on businesses to permanently fund other priorities is not what is needed to address to the emergency presented by the pandemic. The most important and direct way for the City to regain revenue on the other side of the crisis will be to get people back to work. All our businesses - small, medium, and large - need to survive this moment in order for that to happen.

4. If you want support from small businesses, they must be authentically and credibly included from the start. This means not selecting a few specific supporters or limiting the number of business representatives on a panel that will be guaranteed to outvote them every single time. City policy has often suffered from a lack of understanding of the operations of businesses in our community across different sectors. Inclusion of those who understand how businesses work - owners, CPAs, bookkeepers, lawyers who specialize in small business issues - have been strikingly absent from recent City efforts and it has shown. GBSA is eager to be a constructive partner and help get those with the right knowledge at the table, and to help facilitate connection and communication among all participants.

I have been a community leader in Seattle for decades. It pains me to say I am deeply disappointed that the Seattle City Council is allowing itself to be drawn into a particularly divisive battle, pitting large and small businesses and communities against each other, when we must now be united to fight one battle: COVID-19. Please don’t let yourself or colleagues be dragged into something that will harm your community deeply at a time when we need your leadership, compassion, and thoughtfulness. We have a lot of work to do to get through this, let’s all be committed to work together for the greater good – our wonderful Seattle community. Please do not support this any new head tax proposal at this time. We need your leadership now to get on with focusing on surviving this global pandemic.

For equality,
Louise Chernin
GSBA President & CEO