Voters in Seattle have overwhelmingly permitted Proposition 2, which is able to reshape the town’s enterprise and occupation (B&O) tax that applies to gross income. It can affect each small startups and huge tech corporations akin to Amazon.
The poll measure garnered a 67.7% approval in King County’s unofficial election results posted Tuesday night.
The initiative will briefly get rid of B&O taxes for small- and medium-sized companies — together with tech startups — with gross receipts of $2 million or much less.
To offset the income loss for the town, massive corporations would see their B&O tax fee enhance by greater than 50% — from 0.427% to 0.65% for service companies. Solely income above $2 million will likely be taxed.
The brand new tax guidelines is anticipated to lift an extra $81 million per yr for human providers and different metropolis applications.
The town, which is attempting to deal with a substantial budget shortfall over the following two years, says about 90% of small- and medium-sized companies in Seattle can pay fewer B&O taxes if the proposal passes.
Smaller corporations and people simply getting off the bottom would now not pay B&O taxes, doubtlessly saving them hundreds of {dollars} per yr. A providers firm with $1 million in income pays $4,270 in B&O tax yearly on the present fee.
The tax change provides one other wrinkle to the dynamic between Amazon — Seattle’s largest employer — and metropolis lawmakers, following years of a strained relationship over tax coverage.
GeekWire has reached out to Amazon for touch upon the brand new B&O tax.
Seattle Mayor Bruce Harrell and Councilmember Alexis Mercedes Rinck unveiled the proposal in June, framing it as a solution to shield Seattle’s small companies whereas shielding from potential federal funding cuts. They’ve additionally cited the town’s gaping funds deficit.
Jon Scholes, president and CEO of the Downtown Seattle Affiliation, known as it “a boneheaded proposal of epic proportions” in a submit on LinkedIn in June. Scholes supported exempting small companies from the B&O tax. However he stated elevating taxes on bigger corporations “will finally lead to Seattle defunding its tax base.”
Beforehand: Bold or boneheaded? Seattle’s proposed tax hike on big business draws fire as Amazon stays silent
