SPOKANE, Wash. — City Council Member Michael Cathcart is encouraging businesses based in Seattle to make the move to Spokane following the passage of a new payroll tax on big businesses.
The Seattle City Council passed the new tax Monday.
The tax targets big earners and the companies that employ them. Companies with more than $7 million in annual payroll will be charged a percentage based on how many people they employ with salaries of at least $150,000.
Companies that have billion-dollar payrolls will pay an even bigger share for high wage workers.
The tax rate will range from 0.7% to 2.4%, depending on annual payrolls and individual salaries.
Cathcart, who represents Spokane’s Council District 1, issued a statement Tuesday regarding the tax asking businesses to consider Spokane if they want to leave Seattle.
He called the Seattle City Council’s actions “incomprehensible.” Cathcart added that Spokane has fewer regulations and taxes.
He also bragged about the city’s short commute times, lack of traffic, relatively low cost of living and the ease of getting through the Spokane International Airport.
Cathcart encouraged businesses interested in making the move to contact him.
Cathcart spoke with KREM 2 Thursday. He said he's reaching out to businesses impacted by the tax and to show them how great Spokane is.
"We are such a better community well positioned to attract some of these businesses that are just getting hammered by the government over in the City of Seattle and I think we can do a heck of a lot better job than they are," he said.
His goal is to add more jobs to the area that provide a living wage to our community. Cathcart said the city has large plots of land that are ready to be developed for commercial usage.
"When we recruit employers in, 75% of the tax revenue they generate gets reinvested right into that area for more infrastructure so we can just keep building upon ourselves," he explained.
Cathcart said as of Thursday no businesses have reached out to him but the letter he wrote just went out.
Watch the full interview below
The Seattle City Council’s estimate is that the payroll tax would raise at least $86 million by next year for COVID-19 relief and continuation of services. They expect to raise more than $200 million annually in 2022 for affordable housing and equitable development.
The payroll tax will be imposed Jan. 1, 2021. It will sunset on Dec. 31, 2030.
Some business organizations in Seattle were not on board with the vote.
“Taxing jobs is bad public policy, and it is even more concerning as Seattle faces double-digit unemployment," the Downtown Seattle Association said in a statement to KING 5. "As the region enters a deep recession and faces near-record job losses, the Seattle City Council moved forward at a rapid pace to tax hundreds of businesses to fund new city programs instead of planning for how to sustain basic city services and working on economic recovery. The City Council will be sending tax bills to companies across multiple sectors that have their doors closed and have been forced to layoff employees. What’s more, Council plans to borrow from the city’s rainy day fund to implement new spending when the city is facing an annual budget shortfall of more than $300 million. Job taxes are counterproductive to job creation and have a history in Seattle of being enacted and then later repealed. This tax should follow that fate."
If the council didn't approve the tax on Monday, big-business tax advocate Seattle Councilwoman Kshama Sawant gathered 30,000 signatures to put the measure on the ballot in November.
Read Cathcart's full statement below:
“Yesterday, your Seattle City Council decided to hammer hundreds, if not thousands of you and your workers with an enormous tax on jobs.
Actions such as these are incomprehensible. As businesses like yours, your supply chain partners, your customers, employees, and their families continue to reel from the continued shutdown of economic activity across the state, this type of action can only be endorsed by the most tone-deaf of civic or elected leaders.
Thankfully for you, there are options. You can begin the process of leaving Seattle or at least redirecting any business expansion away from the City and instead invest in a community that actually values the great paying jobs you would bring.
A great place to do that is right here in Spokane!
With fewer regulations and taxes, fleeing companies can expect a better business attitude here in Spokane. Unlike Seattle or other communities across the State, in Spokane, actual protections exist for taxpayers and they are written right into our City Charter. New or increasing taxes requires approval by a supermajority (5 of 7) of the City Council or a vote of the people, period. Just last year, through a charter amendment, 72% of Spokane voters implemented a ban on all forms of local income taxes, which includes a local business and occupation (B&O) tax, which has long been in-effect in cities like Seattle.
Employers who relocate can take advantage of the Spokane region’s relatively low cost of living - including consumer prices, utilities and transport costs and, very importantly, housing prices mostrelative to Seattle. You’ll find commute times to be much shorter than probably anything you’ve experienced west of the Mountains.
Across the region, but even right in the City of Spokane, we have an abundant supply of readily available commercial and industrial real estate with access to important transportation options, including freight, air, and rail.
In my own Northeast Spokane Council district, we have large tracts of developable land adjacent to the incoming and already partially complete North/South Freeway. This area is overseen by the Northeast Public Development Authority (NEPDA) which drives public and private infrastructure investment and works to incentivize redevelopment. We have an ever-growing University District featuring multiple campuses and two medical schools adjacent to our urban downtown core and surrounded by many potential redevelopment opportunities for tech, manufacturing and business services.
Flying into and out of Spokane is a breeze and only a short flight across the state with options ranging from commercial, charter or private air travel.
We are also blessed with a large military presence courtesy of Fairchild Air Force Base. The strategically significant air base is one of the largest air-refueling tanker bases in the United States Air Force, which has grown as defense spending increased in the decades after 9/11.
No matter where you are in the Spokane region, you are only a short distance from our beautiful, abundant natural landscapes, wilderness, and recreational access points — hiking trails, ski resorts, lakes, and the incredible Spokane River.
Spokane has skillful and willing workers looking for every opportunity to grow, learn, improve, and, most importantly, work hard.
Your business is worthy of a place to truly do business.
We want your jobs, the community support, the local investments, the economic growth, and the sales and property tax revenue you will generate. Across the state, you won’t find a more worthy community than Spokane. Compared to Seattle…well, there is no comparison, we’re just better.
Come for a visit and see the potential for yourself. Call me anytime to chat about our wonderful City. We have many civic leaders who would be great contacts and my office can help facilitate those connections.
Will the last person to leave Seattle turn the lights off?”
KING 5 contributed to this report.