♪♪
-Hello, I'm your host, Brian Callanan.
Will Seattle voters say "yes" to Prop 2,
to restructure the city's business and occupation tax?
Supporters say the measure will help Trump-proof Seattle,
but opponents say it will hurt
the city's economy in the long run.
-We have to get rid of sanctuary cities
as quickly as possible.
-Up against presidential threats
to City of Seattle policies
and looming federal funding cuts,
moderate and progressive political voices
have joined together this fall.
-We will ensure that critical city services are maintained
despite challenges with our budget
or the Trump regime today.
-They're touting a measure called "Seattle Shield Prop 2"
on your ballot, which would eliminate
or reduce business and occupation taxes
for about 90% of businesses in the city,
while requiring the biggest employers to pay more.
If passed, Seattle Shield would raise
more than $80 million
to backfill essential services like housing and food access.
-This balanced approach,
relief for small businesses
and raising new progressive revenue,
underscores our city's commitment to
both economic growth and community resilience.
-In an unstable economy,
Seattle's top business leaders have panned Prop 2,
and some council members say the vetting process was too rushed.
-It came very late.
Um, and it needs to be passed by today
in order to put it on the ballot for November.
-Even with unanimous council approval
to put Seattle Shield on the ballot,
concerns about its economic impact linger.
-What comes to mind is the quiet quitting of Amazon,
you know, moving over 10,000 workers across to Bellevue.
-"Yes" or "no" on Prop 2?
-Going to be a problem.
-We'll hear from both sides.
-Just bringing more fairness.
-Breaking down the Seattle Shield business tax measure.
Next, on "City Inside/Out."
♪♪
And we are here with two people
who have opposing viewpoints on Prop 2,
the Seattle Shield measure.
Ollie Garrett is president
and CEO of Tabor 100,
a business and social equity advocacy group.
She's here in favor of Seattle Shield.
-Thanks for being here, Ollie. -Thank you for having me.
-We also have with us Eugene Wasserman,
president of the North Seattle Industrial Association.
He's going to take up the "no" side.
Good to see you again, Eugene.
-Good to see you. Glad to be here.
-Let's jump into this.
We had a coin flip before the show,
and Ollie will be starting off
with an opening statement, if you will.
Could you explain briefly what Tabor 100 is?
I want to make sure I cover that
and a little bit why you support Prop 2?
If you could keep it to about a minute, that'd be great.
-So as you said in your opening,
Tabor 100 is an association of entrepreneurs
and business owners, minority owned business advocacy
who are committed to social equity,
and we do a lot of advocacy work for the African American
and the community at large.
-Mm-hmm, and tell me a little bit
about your support for Prop 2, please.
-Well, Seattle small businesses is the backbone
of the local economy.
And too often they are -- they --
that's who carried the tax burden.
It limits their ability to grow,
and this proposal would change that
by raising the B&O tax exemption from $100,000 to $2 million.
Nearly 90% of businesses would see their taxes reduced
or eliminated altogether.
So for businesses making $500,000 or up to
$2 million in revenue,
that thousands of dollars saved each year can be a staff.
They can invest into people, into jobs,
neighborhoods and their own stability.
-Okay, thank you for that,
Eugene, I know you're not representing
the North Seattle Industrial Association today,
but could you explain a little bit about
what that is and your connection to this issue,
why you're against Prop 2?
-The North Seattle Industrial Association is
an association of businesses and property owners
in the maritime industrial business
centered around Ballard, Fremont, and Ballard Locks.
-Mm-hmm.
-Those businesses are family-owned businesses
for years, and in preparing for council testimony
on the initiative,
I found out that a lot of people would be affected by this.
Family-owned businesses would be taxed as large businesses,
and that some of them are considering
leaving the city over this.
They don't see -- it's not like one tax, it's the JumpStart Tax,
this, other taxes, they feel that
this will just go on forever.
-The cumulative effect of sorts here.
Thank you for breaking that down.
I want to break down some of the different pieces here.
Eugene, let me start with you.
A lot of financial experts would say
we're in an unsettled economy.
It's kind of between these new tariff policies,
inflation, slow job growth.
The city of Seattle is very concerned about this.
How that's going to affect tax --
affect tax revenues here.
Worried about impending cuts in federal funding.
So just laying this out here.
The mayor and council are seeing Prop 2 as an answer.
So this would stabilize the economic picture locally.
They see it helping out smaller businesses,
taxing -- taxing larger businesses
and providing this shield against federal cuts
for essential services.
I just wanted to go down that path with you.
Do you see this as the right approach
to an unsettled economy?
-No, I do not. Um --
talking to businesses, being my business,
talking to them, a lot of them are fairly unhappy
about the situation in Seattle.
Many of us, like -- happened with Fred Meyer,
are dealing with crime and homelessness,
and they don't really care for it.
Things have gotten better,
you know, this all started with the pandemic
and defund the police.
And the city is making a lot of progress,
particularly under this mayor.
But there's still a long way to go.
And at some point,
they're not willing to pay more money
for what they consider inferior services.
-You're not seeing these small businesses
getting any protection out of this,
or how do you look at that?
-I don't think it's going to be that much money for them,
but they're also suffering the other problems as well.
And this is -- the city could not tell us
who it affects or doesn't affect.
They picked a number.
I don't know how they picked it,
but I know there are family-owned businesses
who'll be affected by this.
That being, our taxes will double
and it'll be twice the rate of surrounding cities
like Bellevue, Shoreline,
where our businesses could easily move to.
So it creates -- it's an unsettling time,
and having businesses not move in or leave
will make it more unsettling.
-Okay. And let's keep going down this path, Ollie.
I guess the flip side to this question
is taking on another tax year with big businesses
could make an unsettled economy even more unsettled.
Kind of what Eugene is saying here.
We've got office -- office space,
vacancy in downtown Seattle, very high.
There's not a lot of commercial building going on.
And we've seen continued layoffs at big tech businesses
who would probably end up paying this tax.
Jon Scholes from the Downtown Seattle Association
says "Seattle Shield is defunding the city's tax base."
What do you make of that argument?
-Well, 90% of businesses will pay less or nothing at all.
That's a real relief for the backbone of the Seattle economy,
the small businesses.
A small business making under $2 million
will see savings up to about $4,400 a year.
That's payroll, rent,
reinvestment back into their community.
The proposal asks more from big corporations,
but it's lifting the burden off of
the small and medium business.
And I think it's just trying to level the playing field
for small businesses to get a break,
while larger companies help share the responsibility
of keeping our city strong.
-Okay, and I'm going to keep going
down this path with you here,
because I think it's pretty clear,
Ollie and Eugene,
for the last few election cycles,
Seattle really supports taxing high earners or the wealthy
or however you want to look at it.
City voters overwhelmingly against
repealing the state capital gains tax last year.
There's broad political support for the Seattle payroll tax
on large businesses launched as JumpStart back in 2020.
Do you sense the same type of support for Prop 2
when it comes to
laying these taxes on high earners here, essentially?
-Oh, for me -- large corporations,
I think, will see a modest increase.
But let's be clear, we're talking about
companies with millions, sometimes billions in revenue.
They have the capacity to contribute a little more.
In exchange, thousands of small and midsize
businesses getting relief.
That's going to help keep the city --
economy more vibrant and competitive.
-Okay, and also help --
I guess, backfill on some of these services
that the city is trying to provide, too.
I think that's an important piece of this as well.
-Exactly. -Okay. All right.
Eugene, I'll draw you in here.
Just keeping going down this path, about what Seattle --
or where the voting public might be going here.
There's no organized opposition to this measure.
The City Ethics and Elections website shows
the Yes On Prop 2 campaign hasn't raised any money.
And maybe it doesn't need to, because Seattle voters
say "yes" to taxes pretty frequently, as you know.
Is it a foregone conclusion that Prop 2 is going to pass?
-I think it is.
I'm not going to argue that point.
I think it's a bad decision.
But, you know, for I'd say 15 years,
we've had no recession in the city, no problems.
People think economy is great and it'll be great forever,
but that's not happening.
Um, since the pandemic, our major employer, Amazon,
has laid off a lot of people,
and Microsoft has moved out of the city.
There's a big vacancy downstairs -- downtown,
and there's almost no retail downtown.
So these large corporations,
a lot of them have left the city,
and it creates a hole in the city budget
and creates a hole in our downtown.
-Yeah.
Do you do you sense that we're heading
towards some sort of recession here
in the Seattle area or as a state?
-What do you think? -Yeah, I do, the state --
the governor just announced that they had, you know --
have to cut their budgets further back
because they're getting less money.
I think that will happen to the city next time.
Like I said, Amazon has been laying people off steadily
for the last year and a half.
They're a big employer.
And the recent federal cutbacks will affect
the University of Washington.
And that's a big employer here.
And so I just see bad news.
Um, I know restaurants are having trouble because of
sticker shock from the expenses for food and stuff like that.
So it could be really bad times.
-Yeah, I'm interested to see what's next.
I know the city has had some shifting
economic outlook and forecasts,
I should say, over the last several months, too.
Ollie, I'll jump back to you here,
because city leaders really do seem to be banking
on this measure to pass to help with their deficit.
It looks like the city of Seattle
is in a budget hole of somewhere around $150 million.
We should have a better economic forecast
coming up in late October, but I wanted to go down
two paths with you if I could, Ollie.
What happens if Prop 2 passes?
What happens if it doesn't pass?
Can you take me down those two possibilities, please?
-Well, as I stated, if it passed,
it would be a relief to small businesses.
Um, it -- and as we --
I say, this isn't just about a tax policy.
It's about keeping food on the table, roof over heads,
and vital services running within the city.
With -- with $90 million a year.
We protect housing, food support and services for survival.
The very safety net that our community need.
Uh, this plan makes Seattle more competitive,
more fair, more resilient.
It's a smart -- uh, I would say
time limit, balanced solution that helps our businesses thrive
and keep our people protected.
-Okay, and take me down the path if it doesn't pass.
What does that mean?
-I'd like to stay positive
and think about it's going to pass.
-Okay, I'm interested.
You're mentioning a lot of different services there
and people putting food on the table too.
But, Eugene, maybe I can get your back and forth here.
And I know we're talking about
the strong possibility that this could pass,
but what is your assessment
of what's going to happen if it passes, if it doesn't pass?
Can you take me down that hypothetical path, please?
-If it passes, they'll still be short money at some point.
I mean, depending which forecast they use.
And they'll have to raid the JumpStart account more.
They have money aside that they can use and have used for years,
in spite of what they promised the citizens
they're going to do with the money.
-Okay. And if it -- if it didn't pass,
I think I see what you're saying.
They take it from another source.
Uh, and you think that they probably --
you're saying that they actually have some money.
They didn't need this tax in the first place.
-No, $90 million is not a lot of money in city budget.
-Somewhere in between $80 million and $90 million
is what I'm hearing in terms of what it would draw in.
-But. -Right.
-Yeah, but you're saying they didn't need this.
-The budget's like $2 billion for general fund.
I spent a lot of time 15 years ago on the general fund budget,
working with the Seattle Chamber.
And they got money. I know they have money now.
I mean, they may not last for 2 or 3 more years
because they could always do this tax.
And next time, hopefully they'll have more information to tell --
to tell the business community and the public
how it impacts businesses.
They don't really know that.
-It's an important part of the general fund.
It makes up about a third of the general fund.
The B&O tax does, so.
-But not the $90 -- $90 million.
The B&O tax is a major part of it.
And -- and they're having trouble with it
because businesses are left the city essentially.
-Okay, I'm going to dive into that issue in just a little bit,
but maybe I can jump back to you, Ollie,
for a very important question here about
how Prop 2 would potentially shift the tax burden --
the business tax burden -- onto these top ten percent
highest grossing businesses in Seattle.
So the council actually approved exemptions
for Children's Hospital
and the Fred Hutchinson Cancer Research Center,
but they didn't put any exemptions in for grocery stores
who raised a lot of concerns about this.
A group of local grocers wrote this op-ed
in "The Seattle Times" a few weeks ago.
Here's an excerpt from it.
Ollie, it's a big question.
Are you concerned that supporting this measure
could maybe hurt consumers,
raise prices on groceries, for example.
-As I stated, large corporations,
they're going to see a modest increase.
Uh, let's be clear, we're talking about companies,
like I said, with millions, sometimes billions in revenue.
They have the capacity to contribute a little more
in exchange to help with making a level playing field,
sharing responsibilities and fairness,
and just accountability and things.
I think it's got to be cents increase
in things with this -- with the larger businesses.
-I guess the concern from grocers
is they're saying their margin is so slim,
maybe 1 or 2% for that profit margin there.
If you start cutting away at that,
it can really have some impacts,
is the argument that they're making.
-Well, I mean, but what it would do
for small businesses that will have a savings
and they would be able to hire more to spend more.
It could go either way.
It could add more to them being able to afford a little --
to pay a little more in things,
and to invest more into having staff and employees
and growing their business.
Growing their businesses mean more revenue to buy groceries,
to put food on the table so it could add.
-Okay. Okay. Eugene, I wanted to draw you in here
because when the council submitted this to the ballot,
it made the tax reduction for the small businesses permanent.
But the higher taxes for larger businesses
would be reduced after seven years,
creating a situation where
it would still cover the tax break for small businesses.
But it wouldn't bring in this additional money to the city,
about $80 million in revenue.
I guess you could say that's the council
recognizing this tax could be a burden.
They're not overlooking the role that big businesses have
and what they're contributing here.
How do you look at that seven-year sunsetting rule?
-I've never seen a government
that would allow a tax like that to go away.
-You're saying they would keep it around?
-They would keep it, it's just a gimmick they're using.
to get you to say the things you just said.
-They didn't get me to say anything.
-No, but I'm just saying it's going to stay.
-Okay.
-I mean, if you're a business
and you're in Seattle,
if the B&O tax --
if you -- if you're in that group
is twice what it will be in Bellevue, shoreline, Tacoma.
And that's not a good look when people
taxes are one of the things people look at when they move.
So, yeah, it's going to be a problem.
-Yeah. Ollie, do you want to engage that at all?
This idea that having a tax like this
in Seattle could potentially push businesses
into surrounding cities like Bellevue, et cetera,
what do you think about that?
-Well, I was looking at some of the numbers.
So businesses under $2 million, annual gross revenue,
savings up to $4,440.
Businesses with $5 million gross revenue,
savings of $1,200.
Businesses with $12 million annual gross revenue,
it's an increase of $7,700.
So, when you look at the savings
based on the increase in what those savings produce,
I just think it's bringing more fairness.
And it's -- it's -- it is a temporary fix.
I mean, I think it's through 2029.
And then they would take a look at it
and to see at that point what did it do,
what adjustments need to be made, if any?
-Yeah, Eugene seems to think that it would stick around.
And it's tough to find a politician
that makes the tax want to go away sometimes.
-Right. -I know that, too.
Any thoughts about, I guess,
just the -- the cumulative nature of this,
meaning, this is a tax where there are other taxes
on businesses too, big businesses,
especially when it comes to the payroll expense tax,
the JumpStart tax, or whatever else.
Does this kind of pile on in a way where businesses are like,
"Whoa, I don't want to do businesses and --
want to do business in Seattle?"
I think that's another argument you'll hear from people
who don't like this measure.
-I still stick to my basic argument of what it does
for small businesses
and seeing small businesses growth,
seeing maybe small -- new small businesses coming to the city
because of the B&O tax relief.
I just feel like it still can be a benefit in the long run,
in the big picture of leveling the playing field.
-Okay. Got it. And, Eugene,
you were making this point with me earlier.
Just this idea that big businesses they --
when they have, I guess, fewer resources
that can have an impact on some small businesses
that depend on them.
Can you take me down that path?
I think that's a concern.
-If Amazon were to move more jobs out of the city,
there would be less people to go to small business restaurants.
So small businesses won't be able to open up
and make money off of them.
That's how economic development goes.
If you want your city to grow,
you bring in businesses that could bring in outside income,
not income from the community.
Income from the community is great to develop that community.
But if there are no jobs,
people aren't going to go to the restaurants,
et cetera, et cetera.
-Okay. -So, right.
-Yeah, did you have a point you wanted to make about that?
-Yeah, because right now that's a good point on small businesses
are still trying to recover from the pandemic.
They're still trying to hold big business people opening up more
and having employees come back to work
to help with their business.
They're still recovering from that.
This relief during this recovery from the pandemic
will really help them sustain.
And like I said, it's through 2029.
Who knows, in 2029, there could be that there's enough recovery
from the effects of the pandemic
till it all kind of falls into place.
-Okay, okay. I'm interested to see what happens there too.
Eugene, I wanted to talk to you about this
because you testified about this measure
in front of the Seattle City Council.
I know there were even a few council members
who were concerned that this was a little bit rushed
to get Prop 2 onto the ballot.
And I wanted your thoughts about this.
Council president Nelson brought this up.
Council has been dealing with a lot of big issues this year.
The Comprehensive Plan,
they had a vacancy they had to fill, et cetera.
This is a major restructuring of the B&O tax
makes up about a third of the city's
general fund revenue, as I mentioned.
Did it need a longer discussion?
-What do you think? -Yes, it did.
I mean, none of us knew about it.
And then all of a sudden we heard about it.
It's not the way
the government should be working with businesses.
It's another mark against the city
for not including businesses in this.
This city is not seen at this time.
You know, ten years ago was different.
The city was seen as a great place to --
for large businesses to move to,
is not seen as a city
that welcomes large businesses.
And this is a campaign that will be discussing this
and making it seem like we don't welcome large businesses.
-Mm. Ollie, do you have any thoughts about that?
Was this process too rushed?
I know there's some urgency too, to try to
protect small businesses as well.
Help me out with this thought about
how quickly this legislation did get through the council.
-I, uh --
-I would say there could have been more discussion.
And when I say more discussion,
because right now,
a large retailer with $100 billion in sales,
they might only have $2 million in Seattle sales.
So they are actually going to benefit from this.
-Oh I see. Interesting. -So there are, you know,
other ways to look at what could have been said
or done with this, but there could be a benefit
for the larger retailers.
-Do you see Seattle as a business friendly town?
Just put that general question out there.
-What do you think? -Uh --
-Yes, I do. -Why so?
-I -- I do all of my shopping in Seattle.
-[ Laughs ] -I come to Seattle --
I love coming into Seattle.
I go to church in Seattle.
Um, I see -- see, I -- I see the impact
still recovering from the pandemic,
and I think it's going to take years to recover.
And doing this recovery process,
the more relief that we can give to small businesses
and to businesses to bring Seattle back, the better.
I think that, um, during the pandemic,
there was a lot of different things allowed
to help the small businesses sustain.
And once we came out of the pandemic,
all of those things went away
and there was nothing being done to say "yes."
But now everything was used in order to sustain.
Now that we're back in business,
we are still -- there was no revenue,
there is no line of credit.
There is no capital for us to say,
"Okay, we're back up and running, let's go for it."
So anything that can be done to help a business still recover
and get back to business, the more the merrier.
-I see. I wanted to make sure I asked you a question, Eugene,
because I think one of the arguments
that continually floats around the city
and the state is the idea that
we have a very regressive tax system in our state,
meaning Washington -- it's infamously
the second most regressive tax system in the country.
People who are less well-off are paying more in taxes
as a percentage of their income, versus those who make more.
Do you think Seattle Shield,
it's trying to get towards that goal
of having a more equitable tax system?
-I don't think it is. -You don't think so?
-No.
Businesses pay a higher percentage of the city's tax --
taxes revenues than they do elsewhere in the country.
Go look at Portland.
Businesses there pay less because
there's a personal income tax.
-Right, right. -Citizens here,
unless if you're in the $50,000 to $75,000 range,
pay a lot less than people in other cities.
So if you want to make it fair, you would tax the rest
of the population of people, not businesses.
Businesses provide jobs.
And this is not an income tax on businesses either.
It's a gross sales receipt, which has nothing
to do with whether they're making money or not.
-Okay, okay.
-So no, it's not making it any fairer.
I know that's what they feel, but it's not.
-Okay. All right. Any thoughts about having
a more equitable tax system?
I know that argument is thrown around
a lot here in Seattle.
-The proposed B&O tax rate is $0.34 per $100,
for the large business, $0.34.
-Yeah, per $100. Okay.
That's uh -- I think I see what you're saying there.
There's, uh -- there's a lot to discuss here,
but we do need to wrap up here, if you wouldn't mind.
Ollie, a final thought to voters here.
Why do you think they should support Prop 2,
the Seattle Shield measure, one minute, if you could, please?
-At the heart of this proposal
is balance -- balance between lifting up our small
and medium business community,
ensuring that our city continues to provide the services
that keep families safe, housed, and fed.
By raising the exemption to $2 million,
we're giving 90% of businesses meaningful relief.
And by asking larger corporations
to contribute a little more,
we're protecting $90 million a year in vital human services.
-Okay. Thank you for that, Eugene.
I'll give you the last word.
-Keep it to a minute, please. -Sure.
Um -- I'm opposed to this
because it creates a worse business image for the city,
which means less larger businesses
and smaller businesses will move in,
and there'll be less jobs,
and more people will be homeless
and require more resources from the city.
The easiest way to do this
is to have a successful business climate,
which I know the mayor is striving for,
and have more businesses move in and then let them pay the tax,
because big businesses can raise a lot of money
and pay the tax because that's what the business they're in.
-All right. Thank you very much for this.
And we will be right back.
What are people saying online about the vote on Prop 2,
the Seattle Shield measure?
One person writes --
Another says --
We'd like to know what you think.
Send us an email at contact@seattlechannel.org
or find us on social media.
Good to get those comments. Good to hear from some
business leaders here too.
I'm Brian Callanan, and we'll see you next time
on "City Inside/Out."
♪♪