A new analysis from ECONorthwest (prepared for the Downtown Seattle Association) looks at taxes in Seattle. According to the report, “Since 2013, City of Seattle taxes collected have grown by 94 percent, while employment grew by 19 percent and population grew by 22 percent.”

The city’s main sources of tax revenue have historically been property, business and occupation, sales, and utility taxes. These “sources comprised around 83 percent of City tax revenues before 2013, but that share has shrunk to around 63 percent as the City has grown increasingly reliant on new taxes to fuel new spending.”

A significant contributor to that reduced share is the payroll expense tax. As I’ve written, payroll expense tax revenues for 2021 (the first year of the tax) now total $291.6 million. That means that the payroll expense tax is the city’s fourth-largest tax source, just behind the sales tax (which brought in $299.4 million in 2021).

In turn, as the report notes, “the new payroll expense tax levied on businesses has perhaps permanently shifted more of the City tax burden onto business taxpayers.” ECONorthwest estimates that businesses paid 56% of city taxes in 2013 and 64% in 2022. (The chart below is from the report.)

Despite the substantial recent growth in taxes, the city has convened a revenue stabilization work group, which will “recommend solutions at the intersection of the City’s increasing General Fund budget revenue gap and reliance on declining and regressive tax sources.”

But, given the substantial increase in city taxes over time, Seattle’s operating deficit seems to stem not from any revenue shortfall but from unsustainable budgeting.