Seattle Proposition 2 makes four changes to the City’s business and occupation tax. First, businesses currently taxed at an amount equal to the business’s gross income multiplied by a rate of .00222 would be taxed at a rate of .00342 through 2032, and then .00273 beginning in 2033. Businesses currently taxed at a rate of .00427 would be taxed at .00658 through 2032, and then .00526 beginning in 2033. Second, the threshold below which a business does not owe the tax would increase, from $100,000 in annual gross receipts to $2,000,000. Third, a new standard tax deduction of $2,000,000 in annual gross receipts would apply to all businesses. Fourth, credits offsetting the tax increase would be available to comprehensive cancer centers and nonprofit pediatric hospitals.
Proceeds from the increased tax rate, which would support the City’s General Fund, offset decreased revenue from the lower number of businesses paying the tax. Proceeds would fund existing investments that address food access, gender-based violence, small business supports, emergency shelter, homelessness prevention, support for workers’ rights and protections, public health, workforce development and job readiness training, arts and culture, and immigrant and refugee services. Up to $30 million could also be used to implement and administer the tax, and to mitigate the impact of federal funding reductions or federal policy changes relating to housing stability for low-income tenants, food insecurity, financial stability for affordable housing providers and properties, emergency shelters and homelessness, substance abuse disorder treatment, and transportation projects.
