JumpStart Seattle Payroll Tax Upheld

The City of Seattle's recently enacted payroll tax was upheld by a King County Superior Court judge on June 4. The Greater Seattle Chamber of Commerce had challenged the payroll tax as an unconstitutional tax on employees' right to earn wages. Judge Roberts rejected the Chamber's arguments and held that the payroll tax was a valid excise tax on the employer's privilege of doing business in Seattle. The Chamber is currently working with its legal team to explore next steps and has not stated whether it will appeal the ruling.

Background

The payroll tax, referred to as JumpStart Seattle, was passed in July 2020. The tax was imposed on companies doing business in Seattle with payrolls over $7 million a year. The tax is progressive and imposes tiered rates based on the company's total payroll and the amount of compensation paid to employees earning above $150,000 per year. Companies cannot pass the tax along to employees through payroll deductions. The tax went