Seattle Mayor Defends Payroll Tax After Report Links It to 30,000 Lost Jobs
Seattle Mayor Katie Wilson is defending the city’s JumpStart Payroll Expense Tax after a damning new report from the Downtown Seattle Association (DSA) found that the tax has coincided with the loss of approximately 30,000 jobs, a surge in office vacancy to 32%, and more than $10 billion in lost office property value since 2020. The report, published June 15, paints a stark picture of a city struggling to retain businesses and jobs as neighboring Bellevue thrives under a more favorable tax climate.
The Report’s Findings
The DSA report, titled “JumpStart Promised Growth. Seattle Got an Economic Slowdown,” compares Seattle’s economic performance directly with Bellevue, a neighboring city just miles away that has no comparable payroll tax. According to the Downtown Seattle Association, the contrast is dramatic: while Seattle’s downtown office properties saw a 48% decline in assessed value between 2020 and 2025, Bellevue experienced a 7% increase over the same period.
“Since 2020, what we have seen in downtown Seattle is not a ‘jump start,’ but instead, a slowdown,” the report states. Office vacancy in Seattle’s downtown core rose from 6.7% in 2019 to 32% in 2025, compared to Bellevue’s 24% vacancy rate. The report also highlights a significant shift in the tax burden: residential property owners’ share of King County’s tax base rose from approximately 65% in 2019 to 83% in 2025, while non-residential properties’ share declined from 35% to 17%.
Jon Scholes, President and CEO of the Downtown Seattle Association, told Fox News that the findings reflect a broader competitiveness problem. “It’s much more expensive to have a job here as an employer than it is in Bellevue,” Scholes said. “It’s the B&O tax, it’s the payroll tax. I think it’s also the tone and tenor over many years of city government toward employers, toward business.” He added: “We do not need more business taxes. We need more businesses in Seattle paying taxes.”
Mayor Wilson’s Defense
Mayor Wilson, a self-identified socialist elected in November 2025, pushed back against the report’s conclusions, arguing that the JumpStart tax has been essential for maintaining city services. “Seattle’s JumpStart Payroll Expense Tax is a key reason why the city was able to successfully bounce back from the worst economic impacts of COVID,” Wilson said in a statement. “Because of Seattle’s ongoing economic strength, this tax on the highest salaries paid by the largest corporations has raised far more money over the past several years than originally projected.”
Wilson further argued that JumpStart revenue has allowed the city to avoid deep budget cuts that would have been “a massive drag on our local economy.” She cautioned against oversimplifying the challenges facing downtown, pointing to national trends in remote work, higher interest rates, and shifts in the technology sector as factors affecting all major cities.
“My administration is committed to a balanced approach that supports economic growth while advancing our values,” Wilson said. “I believe that the key to improving our economic climate is addressing homelessness, improving public safety, and making our city a better and more affordable place to live and work.”
The Bellevue Contrast
The DSA report’s comparison of Seattle and Bellevue has become a central flashpoint in the debate. Bellevue has no payroll expense tax, no social housing tax, a lower Business & Occupation (B&O) tax rate, and declining property tax rates. Seattle’s B&O tax rate of 0.342% to 0.658% on gross receipts over $2 million is two to four times higher than Bellevue’s 0.1596%. Additionally, Seattle’s property tax rate increased 48% from 2019 to 2026, while Bellevue’s declined 16%.
Kevin Wallace, a developer and former Bellevue City Councilmember, told KOMO News that Bellevue’s advantage comes from restraint. “Bellevue has remained the same. Bellevue just hasn’t increased taxes over the last 10 or 15 years, and our neighbors have been the ones that have really increased the taxes.”
Claire Sumadiwirya, a Bellevue business owner and city councilmember, added that the impact of high taxes on large companies cascades down to smaller enterprises. “When a big company gets overtaxed, what suffers actually is the small business.”
Broader Implications
The JumpStart tax, passed by the Seattle City Council in July 2020 and effective January 2021, applies to businesses with annual payroll exceeding approximately $7 million. In 2026, the tax costs relevant businesses between $1,450 and $9,390 per job depending on tier, with an additional 5% excess compensation tax on salaries above $1 million. The tax was originally intended to fund COVID-19 relief, affordable housing, and equitable economic development, but has increasingly been diverted to fill general fund budget gaps.
Mayor Wilson has signaled interest in potentially expanding the JumpStart tax and adding a local capital gains tax, moves that critics argue would further accelerate the exodus of businesses to neighboring cities and states. A recent survey by the Association of Washington Business found that 44% of business leaders are considering moving their personal residence out of state.
What’s Next
The debate over Seattle’s tax policy is being closely watched by other major U.S. cities considering similar progressive taxation measures. The DSA report provides ammunition for critics who argue that high business taxes drive away jobs and investment, while supporters point to the significant revenue generated. With Mayor Wilson’s administration signaling further tax proposals and business leaders increasingly vocal about their concerns, the tension between Seattle’s progressive tax agenda and its economic competitiveness is unlikely to ease anytime soon.
As the city grapples with these challenges, the central question remains: can Seattle maintain its progressive tax structure without driving away the businesses and jobs that fund its essential services?