Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Sunday, July 05, 2020

Regional/local income tax initiatives in Portland, Seattle are focused on high income households/businesses

The reason that Amazon was "all in" on last fall's local election in Seattle ("Today's local elections in Seattle: the clash between progressive and business interests") was because Socialist Kshama Sawant had pushed forward a head tax on employees. It was later rescinded because of threats by the business community, but Amazon still decided to move a big division to suburban Bellevue, and then put a lot of money into the local elections, with the aim of electing more business friendly candidates, but except for one seat, they lost in every instance.

But one of the criticisms of the tax was that certain kinds of businesses with lots of employees but low margins, like supermarkets or restaurant groups, would be stuck with big costs that would make doing business unaffordable.

In May, voters in Greater Portland, the Portland Metro government covers three counties--Multnomah, the location of Portland, Clackamas, and Washington--passed a regional tax to pay for the support services for the homeless ("Portland Region Voters Approve a Tax on Wealthy Households to Fund Homeless Services: The $250 million-a-year measure aims to end chronic homelessness," Willamette Week).  It's a companion measure to a previously passed bond issue to pay for the construction of housing.  From the article:
[Put on the ballot] Before the COVID-19 pandemic devastated the Portland economy,Measure 26-210 was projected to raise $2.5 billion with a 1 percent marginal tax on couples earning more than $200,000 and a 1 percent tax on profits for large businesses.
This is a step forward because the reality is that housing and homeless issues are regional, not just a matter for the center city to deal with on their own.

Of course, having a multi-county government, a step beyond the merged city-county form that I often advocate, and which is in place in cities such as Indianapolis, Lexington and Louisville, Kentucky, and Macon, Georgia, makes this achieveable.

Seattle hasn't given up on taxing high income corporations like Amazon, and now they've introduced a new kind of withholding tax, levied only against high income jobs, paying at least $150,000. From the Seattle Times article "Call it the ‘boss tax:’ Seattle finally finds a potent way to tax the rich":
It’s the work of Council member Teresa Mosqueda, and the premise is simple enough: Instead of tilting at windmills to try to tax wealth or high incomes, which is legally questionable in our backward state, this plan instead puts a levy on high employee salaries and compensation packages.

Call it a CEO tax — or more accurately, a management or boss tax. Oh and throw in the millionaire pro athletes, too. ...

Mosqueda’s plan, which passed a city committee this past week and is expected to pass a full council vote Monday, would place a 0.7% tax on pay in the city higher than $150,000, assessed on the company’s payroll. The rate goes up to 1.7% for pay above $400,000. Then it tiers even higher for the biggest businesses — in other words, Amazon would pay up to a 2.4% levy on compensation north of $400,000. All smaller businesses with payrolls below $7 million are excluded, and no business would pay anything for any worker making less than $150,000.
Washington State doesn't have an income tax and laws make adding straight up income tax levies virtually impossible.  The head tax proposal was a workaround.  A withholding tax on high incomes is a workaround.

Interestingly, I didn't realize that Washington State laws on income taxes prevented the city and state from levying taxes on visiting athletes.  Most states do this.  In part it helps pay for public funding of stadiums and arenas.

DC is unable to do this because Congress forbids the city to tax nonresidents ("Bryce Harper's move to Philly will generate at least $5 million in wage taxes for the city, more if he lives there, compared to zero for DC when he played for the Washington Nationals").  Most every athlete for the city's baseball, hockey, basketball, and soccer teams lives in the suburbs.

There was one soccer player who lived in Greater Capitol Hill, when the team played at RFK ("D.C. United's Clyde Simms has embraced city living," Washington Post) and a hockey player or two ("Former Caps defenseman Mike Green puts a renovated D.C. rowhouse on the market," Post), but they are outliers.

(In the 2018 Stanley Cup winning run by the Washington Capitals, player T.J. Oshie rode Metrorail to Games 3 and 4, "So, what would T.J. Oshie’s Metro card look like?," NBC Sports.)

Separately, Portland Metro has a mobility withholding tax on wages, to support transit.  Elsewhere in Oregon, Eugene has a similar tax.  So do the New York counties with MTA transit service, as do a couple of other places in the US.

The past entry "The real lesson from Flint Michigan is about municipal finance" (2014), outlines various types of city/county taxes.

But I was focusing on local government funding specifically and didn't include a section on transit taxes. This entry, "Metrolinx Toronto: 25 potential tools to fund transit-transportation infrastructure" (2013) covers transit funding mechanisms.

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At 7:30 PM, Anonymous h st ll said...

Interesting approach, sure, but we are always in a race to the bottom in this country and governance at all levels (local, state and federal) is objectively terrible. I'm not familiar w/ Seattle, I know they have had some success w/ transit but certainly they are making no progress w/ wealth disparities btwn whites and minorities or gentrification etc are they?

At 10:56 AM, Blogger Richard Layman said...

Dammit, my shitty connection just eliminated my huge comment. I knew I should have copied it before I hit send.


Seattle is no different than any other city operating in a market economy. Although earlier than most they did things like eliminate parking minimums, and increase allowable density in transit served areas. And allowing for redevelopment in single family housing neighborhoods (which is still opposed and is difficult in even the best of circumstances, I'm ok with it but why does the design have to be so bad?).

There are a bunch of things that can be done to limit displacement but as long as property taxes work the way they do, people of lesser means will be forced out eventually, because of "capital deepening."

To really deal, we'd need more social democratic approaches, rather than winner take all neoliberal approaches.

If someone were to ask me what my two biggest lessons were from doing and observing in DC I'd say:

1. You need the plans in place before the change happens, not 10-15 years after.

2. You need implementation organizations to be able to effectuate social, community, and public goals vis a vis the market, competing so to speak with for profit firms.

An example that illustrates both:

I was flabbergasted that in the DC Cultural Plan they wrote they could create a "Cultural Creators Affordable Housing Toolkit"!!!!!!!!!!!!!

But not call for the creation of an arts focused CDC that would develop, buy, and hold arts properties both for organizations and artists.

f* a* -- that document came out almost 20 years into DC's resurgence. How the f* can arts organizations and artists compete with firms like Brookfield?

In my writings on cities like Bilbao I say you need 6 elements for revitalization success:

1. Visionary plans (which presumes and subsumes visionary leadership).

2. Implementation organizations.

3. Financing.

4. Accountability mechanisms.

5. Branding and Identity systems(/Marketing)

6. Serendipity and the ability to seize on opportunities that present themselves but weren't in the plan, but fit in with the planning framework.

At 11:04 AM, Blogger Richard Layman said...

I just finished the book by Mick Cornett, former mayor of Oklahoma City. It's actually quite good, although I'd argue naive in a couple respects. And he was fortunate to follow (the second after) the mayor who put together the framework for what is now the city's big success.

I will write about it soon.

It is the perfect illustration of my 6 points, concept of "Transformational Projects Action Planning."

And it was well under way before I ever got started...

Then again, your point about Seattle ... I was reading the book and said, hmm, this realization they had about how to improve their city wasn't much different from Hennepin County in the 1980s realizing they needed to invest in Minneapolis otherwise their tax base and source of county funding would be totally wrecked.

Hennepin County and Minneapolis later, building on what they did, did some great things.

But clearly, not all the right things, especially with low income residents and people of color.

But look where they are today. Lake Street is f*. Just like H Street was. And it will take decades to recover.

But I used them as an example of best practice since 2003-ish when I learned about the Minneapolis Neighborhood Revitalization Program, and later about the Hennepin County approach
Hennepin County and City of Minneapolis revitalization programs. However, the revitalization agenda in Minneapolis is more subtle and spans about three decades, starting with Hennepin County's realization in the late 1980s that if they didn't help to backstop Minneapolis, property tax assessments would continue to drop putting the County budget at risk.

Through study of areas that maintained or lost property value, they realized that the parts of Minneapolis that maintained their value--remember this was during the long post war period when real estate development and locational choice favored the suburbs--were by parks, rivers, and lakes.

-- "A County and Its Cities: the Impact of Hennepin Community Works," Journal of Urban Affairs 30:3, 2008).

So the County started investing in expanding such assets through the Community Works initiative. Later they added rail transit--the light rail program--to the investment and renewal program. The first line only served Hennepin County, connecting the airport to the Downtown, while the second line connects to St. Paul, in adjoining Ramsey County ("The Train Line That Brought the Twin Cities Back Together," POLITICO).

The City of Minneapolis complemented the County initiative with a Neighborhood Reinvestment Program of their own, funded by tax increment bond financing program. The program ran for about 25 years, and projects were determined at the neighborhood scale, working with local agencies (Parks Board, City, School System). A technical assistance and capacity development program was developed to support the initiative.

At 11:48 AM, Blogger Richard Layman said...

Seattle Times business columnist Jon Talton isn't on board:

While a KIRO radio writer thinks that too much of the Seattle business community kow tows to Amazon:

At 8:02 AM, Anonymous Anonymous said...

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