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The Seattle "Head Tax" and bike/pedestrian infrastructure

Sustainability advocates in Seattle have been uniting in an effort to ask Council and the Mayor to retain the “head tax”, a $25 per employee per year tax on employees who drive alone to work. The Downtown Seattle Association and the Greater Seattle Chamber of Commerce have been lobbying Council for the past few years to eliminate this tax that funds bike and pedestrian and other transportation infrastructure.

Advocates are asking that if Council and the Mayor eliminate this tax, that replacement funds be found for bike and pedestrian projects and that a similar incentive for reducing vehicle miles traveled be found. Most of the bike and pedestrian projects are capital in nature and bring much need jobs to our city in this challenging economic time. And, they help our community to do the right thing in biking and using transit and reduce vehicle miles traveled.

Here is the text of the letter sent to Council and the Mayor and signed by members of the Seattle Pedestrian Master Plan Advisory Group, the Advocacy Director of Cascade Bicycle Club, the Executive Director of Great City, the President of Friends of Seattle and by Safe Walks:

Dear Councilmembers and Mayor Nickels,

Funding from the Head Tax (also called the Business Transportation Tax), a tax which is relatively insignificant for individual business, is an important source of funding for transportation improvements that help to promote more responsible forms of transportation, such as biking and walking. While $4.7 million is not much of SDOT’s budget, it makes up a large percentage of total funding for pedestrian and bicycling projects in Seattle. Because of the incredible infrastructure deficit, especially in the Southeast and North parts of the city, and the fact that a prioritized project list has been identified through the draft Pedestrian Master Plan, it seems clear that there is a use and a specific need for these funds.

In fact, there is a clear use and a specific need for funding much greater than this, which is why Seattle needs all it can get for transportation projects. In turn, those transportation projects create much-needed construction jobs. At the same time, because so little in taxes are paid for each business, it is unlikely that repealing this tax will result in more jobs.

We also know that reducing Vehicle Miles Traveled (VMT) is a key step in the City of Seattle’s goal to mitigate Climate Change. Recent studies have shown that policies that discourage driving downtown by removing parking subsidies have a beneficial effect on VMT. Fifty- three percent of climate changing emissions come from the transportation sector. Reducing VMT means reducing emissions.

The Head Tax is one tool this city has to reduce VMT by creating an incentive for people who work downtown to use alternative modes of transportation to get to work and creating a revenue source for pedestrian improvements. The Head Tax prices parking appropriately and creates funding for responsible forms of transportation. It is good policy to support a sustainable transportation policy for Seattle.

While this tax may not be perfect, we feel that it could be strengthened by improving paperwork and linking it to a more effective VMT-reduction process. As tax experts and business owners would tell you, this tax is not a significant financial burden and requires only a small amount of time to complete the paper work. Washington State has the 12th most favorable business tax climate in the US according to The Tax Foundation, a nonpartisan and highly respected tax policy organization.

We recognize your interest in making a statement that supports businesses as they struggle in these difficult economic times. But this is not a symbolic gesture. It has serious consequences for the broader agenda of making our city more sustainable.

It is for these reasons – the tax’s use as a VMT-reduction tool, the fact that the tax is not a financial burden on businesses, and the funding for responsible forms of transportation that will be lacking – that we do not support the proposal to repeal the Business Transportation Tax.

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