Seattle’s new plan targets the tech community through taxes. The region’s tech industry generated quite a fortune for those in the trade. However, it had drastic effects on the middle to low-income communities. The current situation only magnifies the problem. As thousands file for unemployment, tech workers can remotely work from home without disruption in their lives.
The Plan
The payroll tax will first assist families affected by the pandemic. Next, it will tackle homelessness by providing affordable houses/shelters.
Income inequality will be addressed by targeting big tech companies such as Amazon. Seattle’s City Council voted 7-2 to adopt the new tax on Monday. Mayor Jenny Durkan’s signature is currently pending.
How it Works
According to Geekwire, the ordinance’s taxation has a tiered system that applies to companies with annual payrolls exceeding $7 million. Employers belonging to the first bracket will be taxed:
- 0.7% of annual salaries between $150,000-$399,000
- 1.7% of annual salaries exceeding $400,000
Annual payrolls exceeding more than $1 billion per year will be taxed:
- 1.4% of annual salaries between $150,000-$399,000
- 2.4% of annual salaries exceeding $400,000
The tax applies to employers, a percentage of the highest salaries will be taxed. The tax applies to businesses that pay Seattle-based companies. Their employees must work in Seattle, at least more than 50% of the time. The employees should also be making more than $150,000 per year to be subjected to the tax.
The tax also applies to remote workers. If the workers reside in Seattle but do not have work assigned from any city, they are subjected to the tax.
The establishments exempted from the tax are:
- grocery stores
- non-profit hospitals
- insurance companies
- motor fuel companies
- liquor stores
The City Council estimated that the tax would generate more than $214 million per year.
The article also stated that the council would spend the money to invest in:
- rental assistance programs
- non-profit housing
- homeless service providers
- grocery vouchers
Cash assistance will be provided to small businesses.
The city will borrow funds to address these things soon, and the money that will come from the tax will be used to fund all of the plans stated above.