menu
  • Our Story

    • Overview
    • Careers
    • Locations
    • Diversity, Equity & Inclusion
    • Pro Bono
    • Community Involvement
    • Firm Leadership
    • History
    • Alumni
    • Affiliations
    • Media Inquiries
    • Make a Payment
  • Our People

  • Our Insights

    • Events/CLE
    • Publications
    • News
    • Blogs
  • Our Practices & Industries

    • Business
      • Business Transitions
      • Construction
      • Corporate, Securities, and M&A
      • ERISA, Life, Health & Disability
      • Finance & Banking
      • Health Care Transactions
      • Immigration
      • Intellectual Property Transactions
      • Labor, Employment & Benefits
      • Private Investment Funds
      • Private Client Services
      • Real Estate
      • Startups & Emerging Companies
      • Tax
      • Wage & Hour
    • Litigation
      • Antitrust, Competition & Trade
      • Appellate
      • Class Actions
      • Commercial Litigation
      • Construction
      • Creditors' Rights & Bankruptcy
      • Electronic Discovery, Technology & Strategy
      • ERISA, Life, Health & Disability
      • Fiduciary Litigation
      • Financial Institutions Litigation & Investigations
      • Insurance
      • Intellectual Property Litigation
      • International Arbitration
      • Labor, Employment & Benefits
      • Securities & Corporate Governance Litigation
      • Wage & Hour
    • Industries
      • Blockchain & Cryptocurrency
      • Food, Beverage & Hospitality
      • Government Law
      • Investigations, Compliance & White Collar
      • Japan Practice
      • Nonprofit & Social Enterprise
      • Privacy & Data Security
      • Senior Living & Long Term Care
      • Transportation
    • Services
      • COVID-19 Landlord/Tenant Response Team
      • COVID-19 Resource Center
      • Business Dispute Resolution
  • Our Locations

    • Anchorage
    • Portland
    • Seattle
  • Our Careers

    • Attorneys
    • Summer Associates
    • Professional Staff
  • Our Diversity

    • Diversity, Equity & Inclusion
    • Our Story
Lane Powell Web Site
  • OUR PEOPLE
  • STORY
  • INSIGHTS
  • PRACTICES & INDUSTRIES
Search
  • 日本語
  • 中文
  • 한국어
Email this pagePrint this pagePrint to PDF

Topics

  • Tax
  • Washington Tax

Related People

  • Brett Durbin
  • Scott M. Edwards
  • Lewis M. Horowitz

Related Practices & Industries

  • Business
  • Tax
July 10, 2020Publication

New Seattle Jobs Tax May Jump Start an Exodus of Jobs Out of the City — But It Also Creates Planning Opportunities

Tax Legal Update

Under the ironic sobriquet “Jump Start Seattle”, the Seattle City Council has passed a “progressive” tax on jobs at a time when many Seattle businesses are reeling from the coronavirus pandemic. We leave the discussion of the policy underlying this new tax to others. However, we can say for certain that businesses in Seattle are already re-evaluating their Seattle space needs, as well as how and where their employees will work in the future, given their recent experience with the forced transition to remote work. We can also state unequivocally that this new tax is a factor in their assessments.

The tax, which is scheduled to begin January 1, 2021, will be imposed on businesses with total payroll costs of $7 million or more, with the tax rate based on the annual compensation of Seattle employees. The tax rates are reflected in the schedule below:

Total annual payroll expense (everywhere) of the $7 million to $99,999,999.99

  • 0.7 percent of annual compensation paid to Seattle employees that are paid between $150,000 and $399,999.99, plus
  • 1.4 percent of annual compensation paid to Seattle employees paid $400,000 or more1

Total annual payroll expense (everywhere) of the $100 million to $999,999,999.99

  • 0.7 percent of annual compensation paid to Seattle employees that are paid between $150,000 and $399,999.99, plus
  • 1.9 percent of annual compensation paid to Seattle employees paid $400,000 or more

Total annual payroll expense (everywhere) of the $1 billion or more

  • 1.4 percent of annual compensation paid to Seattle employees that are paid between $150,000 and $399,999.99, plus
  • 2.4 percent of annual compensation paid to Seattle employees paid $400,000 or more

There is a limited deduction for non-profit healthcare providers with respect to employees whose annual compensation is less than $400,000, which is scheduled to expire in 2023.

There are several exemptions from the tax: grocery businesses, businesses that only sell liquor, motor fuel distributors, state and local governments and businesses the city is prohibited by state or federal law from taxing.

As with any new tax, there are a number of technical issues that will arise in the administration and application, including which employees will be deemed Seattle employees and when/whether various benefits may be deemed taxable compensation.   

This particular tax is the first of its kind in Washington and presents a number of legal issues as to its validity. There are also a number of planning opportunities that may be available to businesses eager to minimize its impact.


1 To be clear, the tax on an employee earning $400,000 will be at least twice the tax of an employee earning $399,999.

Before proceeding, please note:  If you are not a current client of Lane Powell PC, please do not include any information in this email that you or someone else considers to be confidential or secret in nature.  Prior to the establishment of a lawyer-client relationship, unsolicited emails from non-clients containing confidential or secret information cannot be protected from disclosure.

back to top
  • Our Story

    • Overview
    • Careers
    • Locations
    • Diversity, Equity & Inclusion
    • Pro Bono
    • Community Involvement
    • Firm Leadership
    • History
    • Alumni
    • Affiliations
    • Media Inquiries
    • Make a Payment
  • Our People

    • Our Insights

      • Events/CLE
      • Publications
      • News
      • Blogs
    • Our Practices & Industries

      • Business
      • Litigation
      • Industries
      • Services
      • View All

    Blogs

    Boom: The ERISA Law Blog
    Earth & Table Law Reporter

    • Site Map
    • Disclaimer
    • Data Privacy & Security
    • Contact Us
    • Subscribe
    © 2023 Lane Powell PC Lane Powell & LP
    Logo, Reg. U.S. Pat. & Tm. Off.
    Sitemap
    Connect With Us
    • Twitter
    • Facebook
    • Linkedin
    • Vimeo
    • Make a Payment