Judge tosses challenge to Seattle’s tax on big businesses

SEATTLE (AP) – A King County judge has filed a lawsuit against Seattle’s new tax on high-income workers in large corporations, ruling that corporate taxation is a city jurisdiction.

The Seattle Metropolitan Chamber of Commerce had challenged the tax, arguing that it was a tax on workers, calling it “illegal, invalid and unenforceable”.

King County Superior Court Judge Mary Roberts sided with the city on Friday ruling that the tax applies to businesses, not their employees, and “is a constitutionally permissible excise tax on the privilege of doing business”, reported the Seattle Times.

The tax, passed in 2020, is expected to generate over $ 200 million per year to pay for affordable housing, community-led development, local business support and investments in the Green New Deal.

“Our success in this lawsuit was beyond doubt, given the legislature’s express authorization to introduce such a progressive tax in conjunction with the precedent case law,” Seattle City Attorney Pete Holmes said in a statement.

Seattle City Councilor Teresa Mosqueda, the tax’s main sponsor, called the lawsuit frivolous.

It was the city council’s second attempt to tax large companies. The city issued a tax in 2018, but lifted it under pressure from the economy.

Under the new tax, companies with annual salaries of $ 7 million or more will be taxed at rates between 0.7% and 2.4% on salaries and wages paid to Seattle employees who are at least $ 150,000 each Year earn.

The 2.4% rate supposed to apply to a company like Amazon is applied to salaries of $ 400,000 or more in companies with $ 1 billion or more in annual salaries.

Under the tax, a company with a $ 8 million payroll and a single employee making $ 180,000 would pay a 0.7% tax on that one salary – or $ 1,260.

Rachel Smith, president and CEO of the Seattle Metropolitan Chamber of Commerce, said they are “working with our legal team to explore next steps.”