Council unanimously passes income tax

This afternoon the City Council unanimously passed the proposed tax on income over $250,000 per year.

There was a bit of a dispute among the Council members over an amendment offered by Council member Gonzalez. Her amendment clarifies the allowed purposes of the revenues to offset regressive B&O taxes and to respond to changes in federal policy.

All receipts from the tax levied in this Chapter 5.65 shall be restricted in use and shall be used only for the following purposes: (1) lowering the property tax burden and the impact of other regressive taxes, including the business and occupation tax rate; (2) addressing the homelessness crisis; (3) providing affordable housing, education, and transit; (4) replacing federal funding potentially lost through federal budget cuts, including funding for mental health and public health services, or responding to changes in federal policy; (5) creating green jobs and meeting carbon reduction goals; and (6) administering and implementing the tax levied by this Chapter 5.65.

The debate was whether the B&O tax is actually “regressive.” Gonzalez and Herbold insisted it is; Sawant argued that any tax that is imposed on businesses, not on “ordinary workers,” by definition can’t be regressive. So really it’s an argument about whether small business owners who are scraping by deserve tax relief — while ensuring that the B&O tax burden isn’t reduced on larger corporations. In the end, Gonzalez’s amendment passed by a 6-3 vote, with Sawant, Harrell and Juarez voting no.

From here it goes to the Mayor’s desk for signing. After that, it will likely get an immediate challenge in court, and begin several months — if not years — of legal wrangling.