As representatives of the biggest 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 characterize and the shoppers we serve each day — it’s good for enterprise.
Practically 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 buyers is a pressure of nature, very like the unbiased 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 essential to show a tidy revenue.
Quite than move alongside prices to prospects, the businesses might merely take up 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 increased 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 robust for any of us to evaluate objectively. Nonetheless, making use of the brand new tax fee to a publicly traded firm akin to Kroger, which owns Fred Meyer and QFC, provides us some perspective.
In 2024, the common Kroger retailer introduced in almost $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 fee 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 very important metropolis companies.
If we assume that every of the unbiased 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 unbiased grocery shops like Thriftway have a barely decrease fee 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 sure, the sum represents a low, single-digit dip into the sheer revenue that these corporations accumulate off the backs of our staff.
Furthermore, a extra truthful account from the CEOs would come with the monetary advantages they’ll acquire from 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 increased 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, lowering encampments that companies typically blame on decrease foot site visitors.
We urge Seattle voters to see by way of the scare ways: this tax reform received’t break grocery shops, however it can assist maintain our neighbors housed and fed. When companies chip of their fair proportion, everybody — staff, prospects, and communities — comes out forward.
