Seattle’s controversial payroll tax has failed to meet revenue expectations as major businesses continue to leave the city. Last week, Mayor Bruce Harrell announced that Seattle collected $47 million less in payroll taxes than projected in 2024. The city had anticipated over $400 million in revenue but brought in only $360 million, compounding an already staggering $260 million budget deficit.
The payroll tax, originally called the “Head Tax” and later rebranded as the “Jump Start” tax, was passed in 2020 to fund affordable housing and social programs. Its supporters, including Marxist Councilmember Kshama Sawant, framed it as a means to force large corporations like Amazon to pay their “fair share.” However, many businesses have since relocated to cities like Bellevue, taking thousands of high-paying jobs with them.
Harrell acknowledged that major employers are leaving Seattle, yet he still defended the tax, arguing that corporations must contribute to city services. Despite this stance, Seattle’s declining tax revenue suggests that businesses are prioritizing more business-friendly environments over the city’s progressive policies.
The economic strain is further intensified by President Trump’s efforts to cut federal funding to sanctuary cities like Seattle. Harrell and Councilmember Dan Strauss blamed Trump’s policies, including the rescinding of grants and the implementation of tariffs, for adding to Seattle’s financial woes.
The situation in Seattle is now influencing state lawmakers, as Democrats in the Washington Legislature consider enacting a similar payroll tax at the state level to address their own $15 billion budget deficit. Critics warn that such a move would further drive businesses out of Washington, leaving taxpayers to shoulder the burden of reckless government spending.
