Seattle's road-tax package places undue burdens on business

On Monday, the Seattle City Council's Committee of the Whole ignored the views of the business community and approved a tax package for road improvements that consists of a "triple hit" to business.

The package includes not only increased property taxes, but also new parking taxes and a new head tax, which would be based on the number of a private company's employees working in the city — a penalty on each new job created here. With the three taxes combined, this proposal would amount to a significant shift of the tax burden toward private-sector employers. Furthermore, when placed in context with other utility and transportation needs, the $1.6 billion price tag is simply too large.

Why should individual Seattleites care about this? One of the lessons we all learned during the painful 2001-04 recession was the most essential foundation for anyone's quality of life is a good-paying job at a company or organization with great prospects for the future. Therefore, an essential responsibility for public officials should be to provide an environment in which private employers can thrive. The new transportation package runs exactly counter to that responsibility.

Keeping the economic engine of our city running smoothly requires a tax structure that recognizes the challenges businesses face and allows them to succeed and grow. In looking at tax proposals, the Greater Seattle Chamber of Commerce has long held to some basic principles: The proposal must be fair and equitable; it must be spread across a large base; and it must not damage business or job growth.

According to a study conducted by the Washington Research Council in 2003, businesses in Seattle already pay a higher percentage of total city revenues than in other comparable large cities and higher than businesses pay in suburban cities in King County. More than 54 percent of the city's general-fund revenues come from businesses paying the business-and-occupation tax on gross receipts, property taxes, sales tax and utility taxes.

The last thing Seattle needs to do is to increase its business taxes to make the city less competitive for current and future businesses, whether large or small. That's the major reason the chamber has expressed its opposition to the specific tax package proposed by the mayor and some council members to repair our roads and bridges.

The need to repair Seattle's roads and bridges is unquestioned. However, the burden for this should be spread equitably across all of those who depend on our road network. Property taxes do this because businesses pay a large share of these taxes, while homeowners pay a smaller share individually but a significant share collectively. However, the parking-tax increase and the new head tax compounds the burden on businesses to an unhealthy degree.

The proposed head tax on private employees is especially objectionable. As The Seattle Times pointed out in a May 28 editorial, "The head tax is a bad idea. It is a direct penalty for creating a private-sector job." These new taxes will be layered onto what is already the highest B&O tax in the region, which averages $300 per private-sector employee per year.

The proposed road and bridges package needs to be considered in context of the bigger picture. Let's remember that there are other regional transportation tax proposals, all with laudable goals, for Metro-King County, the Regional Transportation Investment District (RTID) and Sound Transit.

At the same time, businesses and homeowners are likely to be facing higher garbage-disposal and drainage rates, and there will be new "open space" fees on the way. These all need to be considered together, both in terms of their impact on household tax burdens as well as the aggregate impact on the job-generating business sector.

Seattle's tax base only gets stronger if its businesses are healthy and growing. We urge the City Council to reconsider and adopt a transportation package that demonstrates it understands this. We then look forward to working with the mayor and the council to convince city taxpayers that both the revenue and expense sides of the transportation proposal they vote on this November are well-designed to make our city's transportation system both safer and better able to support our healthy economy.

Jim Peoples is chairman of the Greater Seattle Chamber of Commerce and president of KeyBank's Seattle-Cascades District. Don Stark is chairman of the Seattle Business Climate Coalition and a principal of Gogerty Stark Marriott.