
Call it the ‘boss tax:’ Seattle finally finds a potent way to tax the rich - wallflower
https://www.seattletimes.com/seattle-news/politics/call-it-the-boss-tax-seattle-finally-finds-a-potent-way-to-tax-the-rich/
======
hedora
Tl;dr: progressive 2.4% income tax phasing in from $150K-$400K

So, not so much a “boss tax” as it is a “rank and file” tax in big tech
companies. If this were a boss tax, it would be 24% phased in linearly from
$150K to $4M.

Also, Washington doesn’t have an income tax, so the top bracket would still be
paying less than people that make much less pay in California...

~~~
donavanm
Its not an income tax, its introduced as a business tax on payroll. This is
important as the WA state constitution prohibits non uniform taxation. This is
what has preempted most of the previous passion based “tax the rich” schemes
in Seattle.

Edit: A further clarification. A payroll tax, like B&O taxes, are paid
directly by the business. They are not paid by the individual. This is a very
important distinction because this tax would (presumably) be applied in the
same manner to all business operating in the city of Seattle. It would _not_
be a variable tax across individuals themselves.

~~~
hammock
More W-2 taxes, great... How does this tax the rich again?

The idea of calling this "the CEO tax" expresses an ignorance of the type of
income making up a majority of CEO pay.

Likewise calling it a "pro athlete tax" works for Mariners and Seahawks but no
so much for tennis and golf pros.

What this tax does is further suppress wage growth for a working class while
sidestepping the wealth and income sources of much richer people.

~~~
donavanm
I have no idea what you're responding to. As Ive stated this is a _PAYROLL_
tax, _NOT_ a personal income tax, so I dont know where a W-2 would come in to
it. A payroll tax, like B&O taxes, are paid directly by the business. This is
a very important distinction because this tax would (presumably) be applied in
the same manner to all business operating in the city of Seattle.

Secondly you appear to be objecting to the opinions & phrases of a random
opinion piece writer who's positioning this as "tax on the rich." That's fine,
and the columnists obvious slant is pretty silly IMO, but I dont know why it's
relevant to my comment about the distinction between income and payroll.

~~~
topkai22
The most common payroll taxes (social security and Medicare) are paid jointly
by the employer and employee. Just saying “it’s a payroll tax” does not imply
it went won’t show up on a W2 or be paid by the employee.

~~~
donavanm
Fair enough. There is a meaningful difference in taxes based on payroll vs the
individuals net income. And that's not exactly germane to this article or
thread.

I should have been even more explicit in saying this is a payroll _expense_
tax. The authors are _very_ explicit that this is tax on the business and
_not_ any sort of tax born by the employee:

> 5.45.090.S “Payroll expense” means the compensation paid in Seattle to
> employees.

> 5.38.030.B The amount of the payroll expense tax due shall be the payroll
> expense of the business ... multiplied by the following rates:

> 5.38.030.C The tax imposed by this Chapter 5.38 is levied on businesses. A
> business may not make any deductions from employees’ compensation to pay for
> this tax.

> 5.38.090 ... taxes shall be levied upon, and collectible from, the person
> engaging in the business activities herein designated and that such taxes or
> fees shall constitute a part of the operating overhead or cost of doing
> business of such persons.

And this all matters because as soon as it looks like a non uniform property
tax (ie a graduated income tax) it's prempted by WA state constitution Article
VII Section 1.

------
donavanm
The linked article is a columnist opinion piece. The same newspaper has an
actual article [https://www.seattletimes.com/seattle-
news/politics/seattle-c...](https://www.seattletimes.com/seattle-
news/politics/seattle-city-council-votes-in-committee-to-advance-new-tax-on-
big-businesses/) from last week. And heres a link to the actual legislation
[http://seattle.legistar.com/LegislationDetail.aspx?ID=457678...](http://seattle.legistar.com/LegislationDetail.aspx?ID=4576785&GUID=B501D452-6F8F-4F78-9376-1F28E713A43B)

------
supernova87a
Two questions (related to each other):

1) Why don't they just make it an even further graduated tax going all the way
up the billionaires? Instead of having to spread a 2.4% tax on everyone, why
not make it start at 1% and go up to 10% for billionaires, raising the same
amount of money? Save us all some tax and boo hoo, the billionaires have to
pay a little more.

2) What sets the limit of what % a city can tax? I.e. what would stop a city
from imposing a 50% tax on billionaires? Just what the public wants to
stomach? Or is there a legal limit?

~~~
apsec112
There aren't really legal limits on what taxes a US state can enact; an
individual city may or may not be constrained by the state that it's inside of
(eg., California cities can't raise taxes without a 2/3rds vote under Prop
13). In this case, the real constraints are Washington state law (prohibiting
income taxes), and what voters/residents will stand for. A city that put a 90%
tax on billionaires would find that they all left pretty quickly.

~~~
blahblahblogger
> A city that put a 90% tax on billionaires would find that they all left
> pretty quickly.

That's kind of hyperbole given the OP said "up to 10%".

But aside from that, don't a lot of billionaires (steve jobs, bill gates, etc)
only pay themselves a $0 salary when they're rich and own their own company
where they're paid in stock? So any % of $0 is still 0.

~~~
donavanm
> they're paid in stock?

In the US RSU grants are treated as income. They literally show up on the W2
for the full value of the grant.

~~~
tripletao
Tech billionaires tend to own the stock because they founded the company, and
get "paid" from the appreciation of shares they already own. Increased tax on
equity-based compensation would hit a lot of highly-paid hired hands, but not
those truly rich.

Of course an increased capital gains tax might capture the founders too, as
would a wealth tax (though the latter would be very hard to administer on
private companies due to uncertain valuation). The major preference in the
current USA tax code is for investment income over earned income (including
both W-2 income and some but not all small businesses, and including equity-
based compensation except (sometimes) to the extent it appreciates), not rich
over poor or poor over rich.

~~~
donavanm
Sure. And maybe Im fixating on the meaning of "paid" next to the use of
"salary." But I dont think the individuals existing assets or capital gains
really have anything to do with the common misunderstanding of how equity
based compensation is taxed.

~~~
tripletao
To be clear, RSUs are indeed taxed as you said. My point is that
blahblahblogger's billionaires don't tend to get paid that way, but by
appreciation of founder's stock (which can be captured only by a wealth tax,
or by a capital gains tax if/when they sell).

------
eucryphia
Corporations don't pay taxes, people do. A corporate tax is shared between
workers, investors and customers, the latter two can just walk away.

High marginal tax rates redistributes people, not money.

------
ryanwaggoner
So even more tax burden on earned income from the upper middle class, rather
than taxing capital gains or wealth from the truly rich.

------
rayiner
How about we actually fix our revenue problems and adopt a VAT?
[https://www.taxpolicycenter.org/briefing-book/what-
vat](https://www.taxpolicycenter.org/briefing-book/what-vat)

> The value-added tax (VAT) is the world’s most common form of consumption
> tax, in place in more than 160 countries, including every economically
> advanced nation except the United States.

It’s absurd that we faff around trying gimmicks instead of using proven tools
in use almost everywhere else.

~~~
lsllc
We need progressive taxes! VAT is just noise if you're a billionaire, but
it'll be a significant chunk of your income if you're at or below median wage.

I always liked Steve Forbes' flat tax idea -- the first ~$52K exempted (or
whatever median income is) and then a flat rate of 17% beyond that no matter
_how_ it's earned (W-2, dividends, long/short term gains, whatever, it's 17%).
Oh and we get to scrap the tax code.

[https://www.forbes.com/sites/steveforbes/2016/04/18/tax-
day-...](https://www.forbes.com/sites/steveforbes/2016/04/18/tax-day-a-
painful-reminder-of-why-we-must-have-the-flat-tax/)

~~~
tptacek
If what you care about is funding services, which is ostensibly what we're
taxing people for in the first place, _billionaires_ are just noise; there
aren't enough of them to fund anything interesting.

A flat tax is great if your goal is to just stop funding anything at all.

------
randyrand
I thought Washington has a state law against income taxes? Isn’t this an
income tax?

~~~
DaiPlusPlus
It’s complicated. I understand the WA state constitution prohibits non-uniform
taxation (i.e. progressive taxation) which is the only real workable basis for
income tax. So all attempts to introduce any form of income tax tend to be
proposals for a flat 0-2% tax, with those legislative bills failing because
they wouldn’t bring sufficient revenue to justify the significant overheads,
such as setting up a tax system in the first place, and enforcement.

It’s a big problem with local/city-based taxes as Seattle itself is very small
(700k people in a few square-miles): it would be no problem for a wannabe tax-
avoider to move 10 minutes away to Shoreline, Bellevue, Medina, etc. Even if
it was done at the county level, Seattle’s location in King County is too
close to the border with Snohimish County. Lots of people and businesses
priced out of Seattle are relocating to Everett anyway.

------
josephby
Credit for creativity but my hunch is the only people who will get money out
of this are tax lawyers

------
throwawaysea
This is yet another illegal tax (in the state of WA) that Seattle’s inept,
socialist council is trying to push through. Attempts at enacting this tax
have failed before because it is hugely unpopular, especially in the business
community. It is primarily the work of Kshama Sawant (not Mosqueda as the
article claims, who has basically revised a prior similar plan from Sawant).
Sawant is an extremist council member who is part of an organization known as
Socialist Alternative. The tax is so blatantly targeted at Amazon through its
various rules and exemptions, that Sawant herself calls it “the Amazon tax”.
The reason the tax may be pushed through now is because Seattle faces a huge
budget shortfall after years of fast growing spending. Instead of trimming the
fat, their solution is more taxes.

My guess is the council members supporting this hope to invite legal challenge
so that an activist judge can rule in their favor despite the state
constitution preventing graduated income taxes. My hope is that Amazon just
declares all their tech workers remote and moves out of Seattle.

If you’re new to how these socialist organizations think, check out their
self-avowed plan to infiltrate BLM early and leverage its cause for their own
Marxist ends ([https://www.socialistalternative.org/marxism-fight-black-
fre...](https://www.socialistalternative.org/marxism-fight-black-
freedom/black-lives-matter-marxism/)). They have a mentality to implement
their ideology at its fullest with no compromise, and that is definitely the
case with this proposed tax, given its repeated unpopularity here.

If you’re curious about Kshama Sawant specifically, check out her tweet from
July 4th
([https://mobile.twitter.com/cmkshama/status/12795239378445557...](https://mobile.twitter.com/cmkshama/status/1279523937844555777)):

> "I've no respect for the stars & stripes, or any other flag symbolizing
> slavery. Triumphant socialism will haul down that flag & every other that
> symbolizes capitalist class rule & wage slavery. I'm a patriot, but in the
> sense that I love all countries."

~~~
cworth
If you think a 2.4% tax is extremist, in a city that already has a much lower
tax burden than most tech hubs, then Seattle might not a good cultural fit.
Perhaps the south or Midwest would align better?

~~~
throwawaysea
Seattle and Washington have historically been all about smaller governments,
efficient spending, and no income tax. Even without this new tax, Seattle is
overflowing with tax funds from other sources, such as increasing property tax
revenues. They’ve been absolutely wasteful with it all, and quality of life in
Seattle has deteriorated significantly in the last decade.

Such policies and the politicians who back them are a result of a rush of
recent transplants from places like SF, and are not reflective of Seattle’s
true culture.

------
saltedonion
I suspect that the tax will actually be born by the corps. They would still
need to pay their employees competitively to attract talent, so the only
option this have is to boost pay proportionally to the tax.

~~~
tedunangst
Well, the law specifies it's paid by the corporation and may not be deducted
from employee salary...

~~~
bryan_w
They can say that, but money is fungible. If operating expenses go up, then
raises/bonuses go down.

