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Seattle Metropolitan Chamber of Commerce sues over 'JumpStart' payroll tax

A pedestrian makes his way along a waterfront as downtown Seattle is partially hidden in a steady rain beyond Monday, Nov. 18, 2019.
Elaine Thompson
/
The Associated Press
A pedestrian makes his way along a waterfront as downtown Seattle is partially hidden in a steady rain beyond Monday, Nov. 18, 2019.

The Seattle Metropolitan Chamber of Commerce has filed a lawsuit that seeks to overturn the city’s recently passed payroll tax, known as “JumpStart Seattle.” The lawsuit argues it's a tax on “the right to earn a living.”

"We believe that Seattle's payroll tax is illegal, that the city overstepped its authority when it passed this tax, and that the tax is creating a headwind for economic recovery in our region," said Alicia Teel, the chamber’s senior vice president of public affairs and communications.

The chamber's members include more than 2,600 businesses across the Puget Sound region.

Under the measure, businesses with payrolls of at least $7 million will pay a tax on salaries of $150,000 or higher starting next year. The tax is estimated to bring in more than $200 million a year.

The proceeds are key for the city’s 2021 budget, which taps into the tax to help cover a shortfall caused by the COVID-19 crisis. The city also plans to use the funds for economic relief and to invest in affordable housing and city services.

The council passed the tax last summer. It goes into effect in January and will sunset in 20 years.