As representatives of the most important native grocery union within the nation, we strongly assist Proposition 2, the poll measure to bump the native enterprise and occupation tax by one-tenth of 1 % on the highest 10% of Seattle companies. Asking these with extra sources to contribute their fair proportion to society isn’t simply good for the employees we symbolize and the shoppers we serve daily — it’s good for enterprise.
Almost each time we need to enhance the tax code for small companies and dealing individuals, CEOs launch a PR marketing campaign and act like passing on the tax enhance to customers is a power of nature, very similar to the impartial grocery retailer CEOs did in a recent op-ed for The Seattle Occasions.
Firms set costs primarily based on what the market will bear, not solely on the sum of working prices plus some payment vital to show a tidy revenue.
Slightly than move alongside prices to prospects, the businesses might merely take in them. The grocery executives counter that their margins run too skinny to deal with the one-tenth of a 1% enhance within the B&O tax that their suppliers would pay, fastidiously saying their revenue margins run “as little as” 1%-2%.
Whereas that qualifier suggests these corporations generally run larger margins, common industrywide earnings do are likely to run at 2% of gross sales. However don’t let that small proportion mislead you. Promoting items at excessive volumes with “slim” margins nonetheless interprets to a ton of cash.
With out these grocery executives opening their books, it’s powerful for any of us to guage objectively. Nevertheless, making use of the brand new tax charge to a publicly traded firm similar to Kroger, which owns Fred Meyer and QFC, offers us some perspective.
In 2024, the common Kroger retailer introduced in practically $54 million in gross sales. A 2% margin would translate to roughly $1.1 million in earnings per retailer. If voters approve, the brand new B&O charge would imply that each Kroger retailer in Seattle would contribute a further $64,600 — or about 6% — of every retailer’s earnings to keep up important metropolis providers.
If we assume that every of the impartial shops operated by the op-ed authors generated about half of these gross sales ($25 million), then they’d see $500,000 in earnings per retailer and pay $27,600 extra in B&O taxes — or simply 5.5% of every retailer’s earnings. (Smaller impartial grocery shops like Thriftway have a barely decrease charge on this instance as a result of deduction on the primary $2 million of gross receipts, representing a bigger portion of the estimated earnings.)
Whereas $28,000 is a significant amount of cash to make certain, the sum represents a low, single-digit dip into the sheer revenue that these corporations acquire off the backs of our employees.
Furthermore, a extra truthful account from the CEOs would come with the monetary advantages they’ll acquire from the town revenues they assist create. A metropolis with extra inexpensive housing means a greater, extra environment friendly workforce for these corporations to attract from. A metropolis with larger meals safety means extra prospects to maintain these gross sales volumes excessive. A metropolis with extra rental help and shelters retains extra individuals in housing, decreasing encampments that companies usually blame on decrease foot visitors.
We urge Seattle voters to see by the scare ways: this tax reform received’t break grocery shops, however it’ll assist hold our neighbors housed and fed. When companies chip of their fair proportion, everybody — employees, prospects, and communities — comes out forward.
