(The Center Square)- An analysis by the Downtown Seattle Association argues that Seattle’s payroll tax on major corporations is yielding negative consequences five years after its implementation.
The study cites neighboring Bellevue as evidence of the economic expansion and employment opportunities Seattle has forfeited.
Seattle’s central business district has seen a decline of roughly 30,000 positions since 2020, alongside a 48% plunge in commercial real estate values, the report said.
Conversely, it said, Bellevue – which does not impose an equivalent levy – boosted its employment numbers and enjoyed a 7% increase in property values.
Dubbed JumpStart, the Seattle measure was enacted in 2020 and took effect the following year, targeting the payrolls of Seattle’s largest corporations, such as Amazon and other tech firms.
Jon Scholes, the Downtown Association’s President and CEO, said in an interview with The Center Square that the city of Seattle’s budget rises each year, and the city makes up the difference by taxing companies.
“And that’s not the signal that we know has been productive over the last five years when it comes to creating new jobs in Seattle, keeping employers and attracting new ones,” he said.
Employers owe the tax this year if their 2025 payroll exceeded $9,074,409 and have at least one employee who earns $194,452 or more.
Rates for 2026 range from 0.746%-2.557% by payroll and wage tiers.
Big companies like Amazon end up paying the most.
The tax is projected to bring in $388 million this year, a figure revised downward by $76 million from earlier estimations due to a reduction in high-paying jobs in the city, according to a city budget document.
The association report comes as the city budget season approaches and Mayor Katie Wilson and the City Council grapple with how to fill an estimated $140 million shortfall for 2027 and up to an almost $500 million deficit by 2029, estimates show.
Wilson, who ran as a Democratic socialist in 2025, said she is looking for new sources of progressive revenue, including potentially imposing new business levies.
At the same time, she said at the annual state of downtown dinner on March 11, sponsored by the Seattle Downtown Association, that she understood how Seattle’s downtown was put at a competitive disadvantage because of the lack of business taxes in Bellevue.
In a statement on Tuesday, Wilson lauded the tax.
“Seattle’s JumpStart Payroll Expense Tax is a key reason the city successfully bounced back from the worst economic impacts of COVID,” she said.
Scholes said that while the policy initially bolstered municipal revenues, it was short-lived and revenue has started declining.
“We predicted that at the time, and were sort of dismissed and ignored,” he said.
Wilson, in her statement, advised against attributing the commercial core’s struggles to a single variable, noting that the revenue prevented severe budgetary cutbacks that would have further hindered the local economy.
She instead pointed to broader economic factors, including national inflation and high interest rates, as well as remote work trends and tech sector restructuring, which have disrupted metropolitan areas nationwide.
Amazon’s migration toward Bellevue actually began before JumpStart, sparked by a brief corporate head tax in 2018 that Seattle leaders passed but quickly nullified.
The e-commerce giant has expanded its Bellevue staff from a few thousand seven years ago to roughly 15,000 workers as part of a regional hub strategy.
Amazon officials did not respond to requests for comment,
JumpStart is part of a broader shift in Washington’s fiscal landscape, which has drawn criticism from corporate leaders
Earlier this year, the legislature passed and the governor signed into law, a 9.9% levy on high earners making over $1 million.
Rather than demanding a full cancellation of the Seattle city payroll tax, the business association is advocating for no new taxes.
Scholes said the city cannot approve any new taxes on businesses.
“I think it seems every year there’s a new tax or regulation that are being proposed or implemented,” he said.
Scholes said businesses need a stable operating environment when they decide to invest, so they can predict what will happen over a five- to ten-year horizon.
Seattle’s latest business tax began being paid this year, aimed at creating new affordable housing through an organization called the Social Housing Developer.
Companies that pay employees more than $1 million per year contribute 5% of the salary in excess of $1 million toward the housing.
The jumpstart tax was also designed to finance affordable housing and environmental initiatives.
But the revenue has increasingly been diverted to cover municipal deficits. This year, nearly half of the funds – roughly $201 million – were moved to support basic city operations, according to city budget records.