Five years in, new analysis ties Seattle’s ‘JumpStart’ tax to downtown decline

A new Downtown Seattle Association report asserts that Seattle’s signature tax on big employers is backfiring, five years after it went into effect, holding up nearby Bellevue as an example of the jobs and prosperity the city has missed out on in the process.

The report, released Monday afternoon, finds that downtown Seattle has lost about 30,000 jobs since 2020 and that the taxable value of its office buildings has fallen 48% — even as Bellevue, which has no comparable tax, added jobs and saw commercial values rise 7%. 

JumpStart, passed in 2020 and in effect since 2021, taxes the payrolls of Seattle’s largest employers, including Amazon and other big tech companies. It’s projected to raise about $388 million this year, down from earlier forecasts, due in part to the loss of high-paying jobs. 

It is, to a large extent, a tax on big tech. About 70% of JumpStart revenue comes from just 10 companies, most in the technology sector, according to the city’s budget office. That’s a reflection of how heavily Seattle’s economy leans on a handful of large tech employers.

“These were a set of taxes that may have provided some short-term gain to the city coffers, but are inflicting long-term pain,” DSA President and CEO Jon Scholes said in an interview. “We predicted that at the time, and were sort of dismissed and ignored.” 

Supporters see a very different picture. Seattle Mayor Katie Wilson — who helped design JumpStart prior to her election — told GeekWire previously that it was “a very successful policy,” raising hundreds of millions of dollars a year from a small group of highly profitable companies.

GeekWire contacted the mayor’s office for comment on the DSA report.

Amazon had started to expand in Bellevue prior to the JumpStart tax, following the city’s short-lived 2018 “head tax,” a JumpStart precursor that the council at the time passed and quickly repealed. The company has since built its Bellevue workforce to about 15,000 people, part of what it now calls its broader Puget Sound regional headquarters. 

JumpStart was an early example of a wave of new taxes in Washington that has prompted business and tech leaders to warn of an increasingly anti-business climate. Lawmakers have since added a capital gains tax and, this spring, a 9.9% tax on income above $1 million — fueling concerns from some executives about the state’s competitiveness.

The DSA is not calling for outright repeal of the Seattle tax. Scholes said the group wants a “course correction” — incentives and the temporary suspension of payroll or business taxes for companies that invest in Seattle, along with a more welcoming posture from City Hall toward employers. 

The tax was created to fund affordable housing, small-business support, climate programs and equitable development, with the largest share (about 62%) going to housing. But amid recurring budget shortfalls, the city has tapped JumpStart to help prop up its general fund, transferring about $201 million — roughly 47% of the tax’s revenue — to general government operations this year, according to budget documents.

DSA may face a challenge in proving a direct causal link between the tax and the trends in downtown Seattle. Downtowns across the country, including San Francisco, Portland and Chicago, have seen office values fall and vacancies climb since the pandemic with no comparable tax, due to remote work, tech-sector layoffs and AI-driven cuts. 

Scholes asserted that Bellevue has faced similar pressures yet kept growing.

“We think it’s a pretty good control group over there,” he said, attributing the divergence to Seattle’s higher cost of doing business and an unwelcoming “tone and tenor” toward employers. 

Scholes said he was encouraged by early signals from Wilson, who has asked city departments to identify spending reductions ahead of her 2027 budget, due late this summer. He credited the mayor for that but added that the DSA is taking a wait-and-see approach overall. 

Read the DSA report here.