New tax to fund social housing likely headed to Seattle ballots

The measure proposes a 5% “excess compensation” tax on companies for each employee with a salary over $1M to help fund permanently subsidized housing.

a woman and child put a ballot in a blue ballot box that says vote on the outside

Voters drop off ballots at the White Center Library ballot box on voting day, Tuesday, Nov. 7, 2023. (Genna Martin/Cascade PBS)

Seattle voters will likely get a chance to decide whether to impose a new tax on high-earning businesses to pay for the work of the newly created Seattle Social Housing Developer.

On Monday afternoon, House Our Neighbors, a nonprofit social housing advocacy group, submitted 37,819 signatures to Seattle’s Office of the City Clerk to get Initiative 137 on the ballot. That’s well over the 26,521 valid signatures they need to qualify. Initiative campaigns typically collect more than the minimum number to provide a margin of safety for invalid signatures. 

If successful, the measure would levy a 5% “excess compensation” tax on employer payroll expenses for each Seattle-based employee paid over $1 million annually. In other words, an employer would pay a 5% tax on any dollar over $1 million in total employee compensation. Total compensation includes base salary, stock and bonuses. 

That money would be used by Seattle’s Social Housing Developer, the voter-approved public development authority, to build, acquire, manage and maintain permanently subsidized, mixed-income affordable housing. House Our Neighbors, which also spearheaded last year’s ballot measure to create the Social Housing Developer, expects the proposed tax to raise about $53 million annually. 

“In the signature-gathering process, we heard that people are very excited about the idea of taxing the richest businesses to pay for social housing,” said Tiffani McCoy, House Our Neighbors policy and advocacy director. “They know we live in a wealthy area and inequality is becoming rampant. People are really eager for any solution for affordable housing.” 

A Fall 2023 Cascade PBS/Elway Poll found that 63% of Seattle voters support some form of new tax on Seattle’s wealthiest businesses.  

Whether Initiative 137 ends up on the ballot this November or in February 2025 depends in part on how quickly King County Elections and the Seattle City Council act.  

With the signatures now submitted, the City Clerk’s office transmits them to King County Elections for verification within 20 days. The process then goes to the Seattle City Council, which has 45 days to act. Councilmembers can then vote to adopt the initiative outright, send it to the ballot or create a competing initiative on the same subject.  

Given that the current Council majority has expressed a desire to find ways to cut the existing budget rather than raise new taxes in the face of a projected deficit, it’s extremely unlikely they will adopt I-137. 

The Council must take action before the August 6 primary election in order for I-137 to qualify for the November general election. The primary is just 43 days away, so McCoy expects the initiative will likely go to voters next February.  

Seattle voters approved a ballot initiative in February 2023 to create the Social Housing Developer. The new public development authority has had a slow start and, more than a year after its creation, does not yet have a CEO, among other issues. Supporters said the struggle is due to the slow delivery of startup funding from the city and state.  

At its June 20 meeting, the Social Housing Developer Board announced they’d made an offer to a CEO who was “ready to sign,” but have not released the candidate’s name.    

The Seattle Metropolitan Chamber of Commerce voiced its opposition to the new tax when House Our Neighbors announced the signature-gathering campaign earlier this year and cited the public developer’s slow startup progress as part of its rationale.

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