Seattle Lost 30,000 Jobs, $10 Billion in Office Value Since 2021 Payroll Tax, New Report Finds

A new report released this week by the Downtown Seattle Association (DSA) concludes that downtown Seattle has lost 30,000 jobs and seen the taxable value of its office buildings plummet by $10 billion since the city’s controversial “JumpStart” payroll tax went into effect in 2021.

The report, published Monday, draws a stark contrast between Seattle's economic trajectory and that of its neighbor across Lake Washington, Bellevue, which has no comparable tax. While downtown Seattle’s office building values fell by 48% since 2020, Bellevue’s commercial values rose by 7% during the same period. Bellevue also experienced job growth, while Seattle suffered significant losses, according to data from the Puget Sound Regional Council and Placer.ai cited in the report.

“My top takeaway is Seattle's lost its economic mojo,” said Jon Scholes, President and CEO of the Downtown Seattle Association, in a statement accompanying the report’s release. “It's been five years since the city imposed a significant set of new business taxes, and in that time, we've lost about 30,000 jobs in downtown Seattle.”

The JumpStart Payroll Expense Tax was passed by the Seattle City Council in 2020 and implemented the following year. It levies a tax on the payrolls of the city’s largest companies for employees earning over a certain threshold, which was initially $150,000. The stated goal was to generate revenue for affordable housing, climate resiliency programs, and economic support for small businesses. The tax is projected to raise approximately $388 million this year, a figure that is down from earlier forecasts, partly due to the decline in high-paying jobs.

The DSA report argues that Bellevue serves as a useful “control group” for measuring the tax’s impact. Scholes asserted that Bellevue faced the same macroeconomic pressures as Seattle, including the post-pandemic shift to remote work and a broader downturn in the tech sector, yet its downtown economy expanded. “We think it’s a pretty good control group over there,” Scholes noted, attributing the divergence to Seattle’s higher cost of doing business and what he described as an unwelcoming “tone and tenor” toward large employers.

A significant factor highlighted in the analysis is the movement of Amazon, Seattle’s largest private employer and a primary contributor to JumpStart tax revenue. Since the tax was enacted, the tech giant has shifted an estimated 14,000 employees to its expanding campus in Bellevue.

Proponents of the tax, however, have sharply criticized the DSA’s findings. King County Councilmember Teresa Mosqueda, who was on the Seattle City Council and helped design the JumpStart tax, called the report “revisionist history” and a “lazy talking point” that unfairly blames the tax for economic shifts caused by the COVID-19 pandemic.

“I think it's a lazy talking point to try to point fingers when truly this was the source that kept Seattle's budget in the black for the first four years of the pandemic,” Mosqueda stated. She emphasized that JumpStart has become the largest source of funding for permanent supportive housing in the city, making Seattle a regional leader on the issue.

The report also sheds light on the broader consequences of declining commercial property values. As the value of downtown office towers has fallen, the local tax burden has shifted more heavily onto residential properties. According to the report, the residential share of the property tax base in King County has increased from approximately 65% to 83%, meaning homeowners throughout the county are effectively subsidizing the loss in commercial tax revenue from downtown Seattle.

While the report paints a grim picture, the data contains some nuance. Seattle’s downtown office vacancy rate has surged from 6.7% in 2019 to 32%. However, Bellevue has not been entirely immune to market pressures, with its own office vacancy rate rising from 2.5% to 24% over the same period, indicating that remote work trends have impacted the entire region.

While it is difficult to isolate a single cause for a major city’s economic struggles, the cumulative effect of taxes, regulations, and the perceived business climate undoubtedly drives location and investment decisions. In our experience, the Seattle versus Bellevue comparison is a powerful, real-world case study that business leaders and investors are watching closely. Companies, especially those in the growth phase, seek predictability and a stable environment. A complex or punitive tax landscape, particularly one that appears to target specific industries or company sizes, introduces a level of uncertainty that can stifle investment and expansion. This is precisely the kind of scenario where proactive strategic planning becomes essential for a company's survival and growth. Navigating these complex and shifting local tax environments requires a deep understanding of the potential financial impacts. For businesses weighing these critical decisions, C&S Finance Group LLC provides clarity through our financial risk management services. Business owners can learn more at csfinancegroup.com.

The release of the DSA report places renewed pressure on Seattle's city leadership, including Mayor Katie Wilson, who was a vocal advocate for the tax before taking office. The findings are expected to fuel intense debate during upcoming city budget discussions, with business advocacy groups likely to lobby for tax reform. Meanwhile, proponents will continue to defend the tax as a vital funding source for critical social programs, leaving the city at a crossroads over its economic future.