Bellevue Mayor Lynne Robinson acknowledges that Seattle’s tax policy has benefited her city and argues it should serve as a cautionary example for Washington lawmakers considering a new statewide payroll tax.
“This would be detrimental to everybody, I think,” Robinson said Tuesday, one day after State Representative Shaun Scott introduced legislation modeled after Seattle’s Jumpstart Tax that would impose a 5 percent tax on large businesses for employees earning more than $125,000 annually.
Scott contends the measure would generate up to $3 billion yearly and offset anticipated federal funding reductions affecting housing, healthcare, and higher education programs.
Robinson criticized the economic impact of Seattle’s 2020 Jumpstart legislation, pointing to job migration patterns between the two cities. “We’ve seen the effects of putting taxes in cities, on employers and on businesses, and it’s not a productive thing for business. It’s not great for our economy,” she said. “We saw Seattle lose 5,800 jobs while Bellevue gained 4,400 jobs in that same time period.”
Amazon has relocated positions to Bellevue, while Microsoft’s operations have expanded significantly across the Eastside. Neither technology giant responded to requests for comment on the proposal Tuesday, though Microsoft President Brad Smith has previously characterized the state’s business climate as the worst the company has experienced.
Governor Bob Ferguson, when questioned about Scott’s bill, expressed skepticism about its utility for immediate fiscal challenges. “Any potential revenue stream like that doesn’t solve the budget shortfall we’re trying to solve for this next year,” Ferguson said Tuesday.
The governor did not categorically reject the proposal, adding context about the legislative process. “The main thing I really want to emphasize, which is important, is there’s going to be a lot of conversations from legislature by a lot of different ideas, I’m sure on revenues, like there were last year.”
Ferguson approved what has been described as the largest collection of tax increases in state history following the most recent legislative session.
Business community reaction to Scott’s proposal has been overwhelmingly negative. Rachel Smith, chair of the Washington Roundtable representing private sector interests, characterized the legislation as shortsighted.
“It feels more like one of those tax first, plan later proposals, and those simply aren’t working for Washington families,” Smith stated. “Washington already ranks 46th in affordability, and we know that significantly increasing costs for businesses does not lower costs for families in Washington State.”
Gabriella Buono, interim president of the Seattle Chamber, offered extensive criticism of the state’s tax and spending patterns. “For years, Washington has repeated a damaging cycle: rising costs push employers to pull back or leave, shrinking the tax base, shrinking jobs, and the state responds by raising taxes again instead of improving outcomes. Despite record-high revenues and a decade of unprecedented spending growth, results have not improved, not in education, not in housing, and not in homelessness.”
Joe Fain, president of the Bellevue Chamber, expressed concern that the statewide payroll tax proposal, which would credit Seattle businesses already paying the city tax, would eliminate competitive advantages Bellevue currently enjoys.
The timing coincides with Meta’s announcement this week that it will not exercise its expansion option in Bellevue’s Spring District, though the company maintains existing operations there.
Robinson’s perspective incorporates nuance, suggesting the state could model new revenue measures on existing sales tax structures that provide cities with targeted funding authority.
“The state allows cities to collect a point, .01% sales tax. They’re really stringent on what you can use it for. It has to be used on housing stability. We collect money every year, and we put it towards housing stability. We pay for supportive housing, for all the services we do, rental assistance, and so that’s a great opportunity for a city to take care of what’s going on inside its boundaries,” Robinson explained.
The mayor’s comments suggest support for localized revenue mechanisms with specific use restrictions rather than broad statewide taxes that might drive business relocations.
The debate reflects tensions between revenue needs and economic competitiveness that have characterized Washington’s fiscal policy discussions. Proponents of the payroll tax argue it fairly distributes tax burden to profitable corporations while funding essential services. Critics contend it will accelerate business departures and ultimately reduce overall tax revenue.
The 5,800 job losses Robinson cited for Seattle compared to Bellevue’s 4,400 job gains during the same period suggest significant employment migration between neighboring cities. These figures provide empirical evidence supporting arguments that tax policy influences corporate location decisions.
Amazon’s partial relocation from Seattle to Bellevue represents one of the most visible examples of this pattern. The technology giant, which was founded in Seattle and long maintained its headquarters there, has established substantial operations across Lake Washington in Bellevue.
Microsoft’s expansion throughout the Eastside similarly demonstrates corporate preference for jurisdictions perceived as having more favorable tax and regulatory environments. The company’s Redmond headquarters has been supplemented by significant facilities in Bellevue and surrounding communities.
The 46th ranking in affordability that Rachel Smith referenced places Washington near the bottom nationally on this metric. High housing costs, sales taxes, and other expenses contribute to the state’s challenging affordability profile for residents.
Ferguson’s budget proposal, expected later this month or in early January ahead of the January 12 legislative session start, will clarify the governor’s priorities for addressing fiscal challenges. His comments suggest openness to various revenue discussions while expressing doubt about the payroll tax’s effectiveness for immediate needs.
