Morales and Sawant Want Emergency Tax on Big Businesses to Help Lower-Income Seattleites During Crisis

by Chetanya Robinson

As the coronavirus pandemic threatens an economic crisis across Seattle and the nation, Councilmember Tammy Morales (District 2: South Seattle and Chinatown- International District) said her office has been flooded with emails and calls from Seattleites scrambling to afford groceries and pay their rent at the beginning of the month, seniors worried about paying for medication, and small businesses unsure of how they can make payroll.

In response, Morales and Councilmember Kshama Sawant (District 3: Central Seattle) have announced an emergency proposal, funded by a tax on large businesses, to provide cash assistance for people facing financial hardship due to the coronavirus. “In times like this when there is a shock to our systems, we have to act quickly to provide relief,” Morales said during an April 1 tele-press conference.

The tax would raise $500 million per year. For the first year, $200 million dollars would be used to give up to 100,000 low-income Seattle households $500 dollars per month for four months.

In subsequent years, three quarters of the annual revenue from the tax would fund the development of social housing affordable for those making between zero and 100 percent of Area Median Income. It could create an estimated 10,809 housing units over ten years, according to a summary of the proposed legislation.

The remaining revenue raised each year would be used for Green New Deal investments in Seattle, such as converting housing units to electric heating, installing solar panels, and training people for jobs in the green economy.

The goal is to help those most vulnerable in the crisis, including people who have recently lost their jobs, homeless people, seniors, refugees and undocumented immigrants, Morales and Sawant said.

“Workers and the most vulnerable among as are facing twin crises: Coronavirus and capitalism,” said Sawant, noting that many workers have not only lost their jobs, but do not have paid leave and are having a hard time getting unemployment benefits.

During the phone conference, Violet Lavaitai, executive director of the Tenants Union of Washington, and Amzi Jeffs, rank-and-file leader, UAW 4121, the union of Academic Student Employees and Postdocs at the University of Washington, voiced support for the tax.

Matt Smith, an Amazon cargo handler, told reporters that workers like him have been working especially hard as the pandemic hit, often without protective equipment, and many have lost their jobs. “Every single one of my Amazon coworkers is feeling the impact of this crisis,” he said.

A record number of Washington residents filed for unemployment insurance in mid-March, the Seattle Times reported — and then, a week later, broke that record, totalling seven times as many claims as at the height of the Great Depression.

On Monday, the Council unanimously passed a symbolic resolution brought forward by Councilmember Morales, asking Gov. Jay Inslee, Congress and President Donald Trump to put a moratorium on rent and mortgage payments.

The legislation will be introduced to the City Council on Monday. If the Council approves the tax, Sawant and Morales hope the first payments will be sent out in June.

Morales and Sawant said that the payments will be essential to fill gaps in people’s budgets. “This money is absolutely vital for our community members,” said Sawant, adding that the tax itself would not be enough, and would need to be supplemented by major action from the state and the federal government.

“Councilmember Sawant and I realize that 500 dollars a month is not nearly enough to cover rent in Seattle,” Morales said. “But it can help buy groceries or diapers or help cover healthcare costs, and it’s going to be important to help people stay in their homes where they are safest during this crisis.”

The new proposal would wield an excise tax of 1.3 percent on payroll from the 800 largest corporations in Seattle, those with payrolls over $7 million per year — about two percent of Seattle businesses. In crafting the legislation, City staff used Employment Security Data from King County Office of Economic and Financial Analysis. All nonprofits, government employers and grocery stores would be exempt from the tax.

“These companies can afford to pay this tax,” said Sawant. “It represents a tiny sliver of their revenue, and frankly this is the least they should be asked to do.” Washington state is home to some of the world’s wealthiest people and a regressive tax structure that hits low income people harder, Sawant said.

The money would be distributed to households enrolled in assistance programs such as Fresh Bucks, though Councilmembers are also looking at how to distribute payments to those who may not be enrolled in such programs, such as undocumented immigrants.

The tax would not actually be collected until 2021, so the emergency payments would require borrowing $200 million from existing funding, which would be repaid in 2021.

The new proposal is a revised version of a tax Morales and Sawant proposed earlier in March, which would raise $300 million per year to fund affordable housing and Green New Deal measures.

The proposal also echoes the Employee Hours Tax (or “head tax”) that City Council passed in May 2018, only to repeal in a 7-2 vote the following month. That tax proposal, also led by Councilmember Sawant, would have charged companies with over $20 million in gross revenue $275 per employee per year, to raise housing and homelessness services. Sawant and Mosqueda were the two Councilmembers who voted against the repeal.

In an email statement, Mosqueda did not immediately support Sawant and Morales’ legislation outright, saying she looks forward to reviewing the legislation, and further discussions.

“The need for revenue and resources to address the COVID-19 is great,” Mosqueda said in the statement, adding that the virus is worsening inequality faced by low income and marginalized people. “I support any conversation that begins to address our community’s needs during the coronavirus emergency and beyond, while ensuring that any conversation surrounding new revenue must take into account the current economic climate.”

Sawant launched a petition in March to put an initiative on the November ballot taxing big businesses, originally to raise $300 million per year. The initiative could be another way to enact the tax if the City Council does not pass the legislation. If this does not happen, Councilmembers Sawant and Morales “will re-evaluate their options,” said LaKecia Farmer, policy analyst for Morales.

Chetanya Robinson is a Seattle based journalist

Featured image by Chloe Collyer