On the topic of B&O: The great Seattle vs. Bellevue tax debate

One city’s revenue plan is another city’s recruitment strategy

We don’t usually open with tax policy, but with a major change on the table in Seattle and business leaders across the region asking what it means, we figured it was time for a quick breakdown.

Last month, Seattle Mayor Bruce Harrell and Councilmember Alexis Mercedes Rinck unveiled the Seattle Shield Initiative, a proposed overhaul of the city’s Business & Occupation (B&O) tax. At a high level, it raises the exemption threshold from $100,000 to $2 million, a big win for many small businesses. Around 76% of current payers would no longer owe the tax at all.

To offset the relief, the plan significantly increases rates on businesses earning above that threshold. Rates for retail, wholesale, and manufacturing would rise from $0.22 to $0.34 per $100 in receipts, and service-sector rates would jump from $0.43 to $0.65.

City officials estimate it would generate an additional $90 million per year to help address a looming budget gap and fund affordable housing, shelter, food access, and other services.

Supporters frame the policy as a progressive solution to a structural challenge, while others, including several longtime Seattle employers, warn it could accelerate an already noticeable shift in the region’s economic gravity.

How This Compares to Bellevue

In contrast, Bellevue continues to offer what many business leaders call “boring” in the best way.

The City of Bellevue isn’t facing a budget deficit, and no new tax increases are on the table. City services like roads, parks, public safety, and utilities are supported through flat, transparent tax structures: One rate for property, one for sales, one per utility, and one on gross receipts (B&O). No brackets, no political gimmicks, and no sudden curveballs for growing companies.

Here’s how the two B&O structures compare:

That’s a quadrupling of taxes on large-scale housing production at a time when our region is already struggling to keep up with demand. One local developer recently noted that while Bellevue might not always make headlines for dramatic policy moves, it consistently makes the math work for builders, employers, and investors. And right now, predictability matters.

A Regional Perspective

Bellevue Chamber President & CEO Joe Fain weighed in on the Seattle proposal shortly after its announcement. While acknowledging that Bellevue may benefit in the short term, as companies weigh where they can grow without surprise costs, he cautioned against viewing this as a zero-sum win.

“Let’s be clear as to the real threat: It’s not the fact that bad ideas can hop across a lake. It’s that we are one region, and Seattle is our brand,” Fain said. “What’s bad for Seattle is bad for Bellevue.”

He pointed to a broader issue facing the region’s business climate: A narrative, increasingly common in some policy making circles, that large employers are expendable or disconnected from the broader community. That narrative, Fain argues, doesn’t reflect the values or reality of most Washingtonians.

He also noted that too often, the business community has allowed others to define that narrative unchallenged.

“Our prosperity is neither permanent nor guaranteed. It’s something we have to work for every day,” he said. “That work has a cost. Sometimes it’s financial, sometimes reputational. But the cost of inaction is far greater.”

What Happens Next

The Seattle Shield proposal is expected to head to voters this fall. As that conversation unfolds, the Bellevue Chamber will continue to champion policies and a mindset that support long-term regional strength.

To Seattle business owners: If you’re looking East for stability, we’re here. If you choose to stay and advocate for a more competitive, sustainable Seattle, we’ll be right there with you. Because the health of our economy doesn’t end at the shoreline.

We are one region, and we rise or fall together.