As representatives of the largest local grocery union in the country, we strongly support Proposition 2, the ballot measure to bump the local business and occupation tax by one-tenth of one percent on the top 10% of Seattle businesses. Asking those with more resources to contribute their fair share to society isn’t just good for the workers we represent and the customers we serve every day — it’s good for business.
Nearly every time we want to improve the tax code for small businesses and working people, CEOs launch a PR campaign and act like passing on the tax increase to shoppers is a force of nature, much like the independent grocery store CEOs did in a recent op-ed for The Seattle Times.
Companies set prices based on what the market will bear, not solely on the sum of operating costs plus some fee necessary to turn a tidy profit.
Rather than pass along costs to customers, the companies could simply absorb them. The grocery executives counter that their margins run too thin to handle the one-tenth of a 1% increase in the B&O tax that their suppliers would pay, carefully saying their profit margins run “as low as” 1%-2%.
While that qualifier suggests these companies sometimes run higher margins, average industrywide profits do tend to run at 2% of sales. But don’t let that small percentage mislead you. Selling goods at high volumes with “slim” margins still translates to a ton of money.
Without these grocery executives opening their books, it’s tough for any of us to judge objectively. However, applying the new tax rate to a publicly traded company such as Kroger, which owns Fred Meyer and QFC, gives us some perspective.
In 2024, the average Kroger store brought in nearly $54 million in sales. A 2% margin would translate to approximately $1.1 million in profits per store. If voters approve, the new B&O rate would mean that every Kroger store in Seattle would contribute an additional $64,600 — or about 6% — of each store’s profits to maintain vital city services.
If we assume that each of the independent stores operated by the op-ed authors generated about half of those sales ($25 million), then they’d see $500,000 in profits per store and pay $27,600 more in B&O taxes — or just 5.5% of each store’s profits. (Smaller independent grocery stores like Thriftway have a slightly lower rate in this example due to the deduction on the first $2 million of gross receipts, representing a larger portion of the estimated profits.)
While $28,000 is a meaningful amount of money to be sure, the sum represents a low, single-digit dip into the sheer profit that these companies collect off the backs of our workers.
Moreover, a more truthful account from the CEOs would include the financial benefits they’ll gain from the city revenues they help create. A city with more affordable housing means a better, more efficient workforce for these companies to draw from. A city with higher food security means more customers to keep those sales volumes high. A city with more rental assistance and shelters keeps more people in housing, reducing encampments that businesses often blame on lower foot traffic.
We urge Seattle voters to see through the scare tactics: this tax reform won’t break grocery stores, but it will help keep our neighbors housed and fed. When businesses chip in their fair share, everyone — workers, customers, and communities — comes out ahead.
