Five years ago, a new analysis linked Seattle’s ‘JumpStart’ tax to the city’s decline

A new report by the Downtown Seattle Association says Seattle’s signature tax on large employers is backfiring, five years after it took effect, holding up nearby Bellevue as an example of the jobs and prosperity the city missed out on in the process.

The report, released Monday afternoon, finds that the city of Seattle has lost about 30,000 jobs since 2020 and that the taxable value of office buildings has dropped 48% — even as Bellevue, which does not have the same tax, added jobs and saw prices rise 7%.

JumpStart, passed in 2020 and starting in 2021, taxes the income of Seattle’s biggest employers, including Amazon and other big tech companies. It is expected to raise about $388 million this year, below previous forecasts, due to the loss of high-paying jobs.

To a large extent, it is a tax on high technology. About 70% of JumpStart’s revenue comes from just 10 companies, mostly in the technology sector, according to the city’s budget office. That’s an indication of how dependent Seattle’s economy is on a few tech employers.

“These were a set of taxes that may have provided a short-term benefit to the city’s coffers, but caused long-term pain,” DSA President and CEO Jon Scholes said in an interview. “We predicted that at the time, and we were kind of dismissed and ignored.”

Supporters see a very different picture. Seattle Mayor Katie Wilson — who helped design JumpStart before her election — told GeekWire previously that it was “a very successful policy,” raising hundreds of millions of dollars a year for a small group of highly profitable companies.

GeekWire has contacted the mayor’s office for comment on the DSA report.

Amazon had begun expanding in Bellevue before the JumpStart tax, following the city’s temporary “head tax” in 2018, a precursor to JumpStart that the council at the time passed and quickly overturned. The company has since built its Bellevue workforce to about 15,000 people, which is part of what we now call its Puget Sound regional headquarters.

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JumpStart was an early example of a wave of new taxes in Washington that have prompted business and technology leaders to warn of a growing anti-business climate. Lawmakers have since added a capital gains tax and, this spring, a 9.9% tax on income over $1 million — fueling some administration’s concerns about state competition.

DSA is not calling for a complete repeal of the Seattle tax. Scholes said the group wants a “course correction” — incentives and a temporary suspension of payroll or business taxes for companies investing in Seattle, as well as a positive stance from City Hall for employers.

This tax was created to support affordable housing, small business support, climate initiatives and equitable development, with the largest portion (about 62%) going to housing. But amid recurring budget shortfalls, the city has tapped JumpStart to help fund its general fund, transferring about $201 million — about 47% of tax revenue — to general government operations this year, according to budget documents.

DSA may face the challenge of establishing a direct causal link between taxes and trends in the city of Seattle. Cities across the country, including San Francisco, Portland and Chicago, have seen office prices drop and job vacancies rise since the pandemic without a comparable toll, thanks to remote work, tech sector layoffs and AI-driven cuts.

Scholes asserted that Bellevue has faced similar pressures but is still growing.

“We think it’s a very good regulatory group out there,” he said, citing differences in Seattle’s high cost of doing business and an unfavorable “tone and tenor” for employers.

Scholes said he was encouraged by the early signs from Wilson, who has asked city departments to identify spending cuts ahead of his 2027 budget, which is due later this summer. He praised the mayor for that but added that DSA is taking a wait-and-see approach in general.

Read the DSA report here.