Seattle’s payroll expense tax on large businesses generated $47 million less than projected last year, with Mayor Bruce Harrell suggesting major corporations are not contributing their fair share. The Office of Economic and Revenue Forecasts released its year-end revenue report on Tuesday, showing actual revenues of $360 million, falling short of the October projection of $406.8 million.
The JumpStart Payroll Tax, passed in 2020 and often referred to as the “Amazon Tax,” targets about 500 of Seattle’s largest businesses, including Amazon, Meta, and Google. Companies with at least $8.5 million in local annual payroll pay a tax ranging from 0.75% to 2.5%. The tax revenue is intended for affordable housing and environmental initiatives. Amazon, Meta, and Google alone are projected to contribute $520 million this year.
Harrell pointed to large companies relocating employees outside of Seattle to avoid the tax as a key factor in the shortfall. He acknowledged the impact on the city’s budget and emphasized the need to design tax policies that generate necessary revenue while maintaining economic balance. Amazon, for example, has been moving more employees to Bellevue, aiming to bring 25,000 jobs to the city.
Seattle is relying heavily on the payroll tax to address a projected $350 million general fund shortfall through 2026. The city’s revenue from the tax already declined by 13.6% in 2022, from $293 million to $253 million, due to a slowdown in the tech sector. Layoffs in the Puget Sound region have also impacted revenues, with Meta laying off 3,600 employees earlier this year.
City officials are hopeful that the return of workers to downtown offices will help stabilize revenue. However, Seattle’s largest companies now face an additional tax: a 5% levy on annual compensation exceeding $1 million per employee. The funds generated will support the development of social housing, with the tax taking effect at the start of the year.
