Seattle poised to pass ‘excess compensation’ tax for social housing
After the first ballot count in the special election, Seattleites heavily favored a business tax instead of pulling from the Jumpstart payroll tax.
by Josh Cohen
February 11, 2025
After the first round of ballot counting Tuesday night, Seattle voters have definitively shown they want to fund social housing and are on track to levy a new tax on businesses to do so.
Voters weighed in on two social housing questions in the Feb. 11 special election: whether to fund the new developer at all and, if so, by what means.
On whether to fund social housing, Seattle voters are strongly in favor with Yes leading No 68% to 32%.
On the question of how to fund it, Proposition 1A leads Proposition 1B 57.5% to 42.5%.
Prop 1A would levy a 5% “excess compensation” tax on employer payroll expenses for each Seattle-based employee paid over $1 million in annual compensation. Employers would pay a 5% tax on any dollar over $1 million in total employee compensation. It would generate an estimated $50 million a year to pay for land acquisition, construction and administrative costs for the Seattle Social Housing Developer.
Prop 1B would provide the Social Housing Developer $10 million a year from the existing Jumpstart payroll expense tax. In addition, it places conditions that the Social Housing Developer must meet to receive funding, such as hiring a chief financial officer and demonstrating “adequate financial controls” as determined by the Seattle Office of Housing.
Social housing is a form of mixed-income, publicly owned affordable housing primarily meant for lower-income to upper-middle-income residents. Residents will pay no more than 30% of their monthly incomes in rent (the standard definition for an affordable cost of living). Higher-income residents would pay higher rents, which would help subsidize the lower rents paid by lower-income residents.
Voters approved the creation of the Seattle Social Housing Developer in the February 2023 election, which had been put on the ballot through a citizens’ initiative led by advocate group House Our Neighbors. The same group collected signatures to put the excess compensation tax to a vote this Feb. 11.
The Seattle City Council voted in September to place the competing Prop 1B on the ballot. February special elections typically have low voter turnout. King County Elections projects that turnout will be about 33% this February. Tuesday’s results tallied 95,173 ballots, slightly more than half of the total the county elections office expects this election.
The Seattle Metropolitan Chamber of Commerce endorsed Prop 1B and has led the campaign against Prop 1A.
A PAC funded by contributions from large Seattle-area businesses, including Amazon and Microsoft, spent more than $500,000 opposing Prop 1A and supporting Prop 1B in January and February.
In addition to the social housing tax question, Seattle voters were asked to renew two expiring school levies.
The first property tax helps pay for teacher and staff salaries, transportation, operations, extra-curricular activities and more. It was passing 77.7% to 22.3% Tuesday night.
The second property tax helps pay for capital improvements, including construction of new schools and maintenance of existing buildings. It was passing 71.9% to 28.1% Tuesday.
Because Washington votes by mail, it can take days and even weeks for election results to be finalized. The next round of election results will be released around 4 p.m. on Feb. 12, with the final results expected to be certified on Friday, Feb. 21.