Howard Schultz Critiques Seattle’s Business Environment
Howard Schultz, the billionaire behind Starbucks, which grew from a small coffee chain in Seattle to a global powerhouse, recently expressed concerns about his hometown. He describes the atmosphere there as “hostile” to business, attributing it to the policies of what he calls a “socialist” mayor.
Having relocated to Miami, Schultz’s move coincides with proposals in Washington state for new taxes targeting billionaires. In a recent op-ed for the Wall Street Journal, he cautioned that an increasing number of companies may consider leaving the high-tax Pacific Northwest.
He pointed out that the “ecosystem” responsible for the emergence of tech giants like Microsoft and Amazon is starting to show signs of wear. Schultz noted issues such as persistent homelessness, messy business districts, ongoing budget deficits, struggling public schools, and a slowdown in tech advancements.
Starbucks has recently announced plans to open a new office in Nashville, which has fueled speculation that this might hint at a permanent departure from Seattle.
A Starbucks representative chose not to comment on these developments.
Schultz criticized Mayor Katie Wilson for her “socialist rhetoric,” mentioning that she publicly disparages her employer while continuing to depend on her income from Starbucks.
“She has advised residents who disagree with her policies to leave,” Schultz remarked.
He also voiced frustration with Olympia lawmakers, indicating they have opted to burden businesses further instead of fostering growth in Washington.
Despite stepping down as CEO in 2023, Schultz remains the largest stakeholder in Starbucks and has denounced the state’s “regressive” taxation.
Washington has long branded itself as a business-friendly locale, primarily because it avoids traditional corporate or personal income taxes. Instead, it imposes a Business and Occupation Tax (B&O), which taxes gross receipts, meaning companies pay even when they aren’t profiting much.
However, in recent years, many business leaders and affluent entrepreneurs have claimed that the tax system has become progressively more burdensome, especially in Seattle. The state introduced a 7% capital gains tax in 2022, followed by a 2.9% surcharge on profits exceeding $1 million.
Seattle has also enforced a Jumpstart payroll tax targeting high earners, alongside a public housing tax for income surpassing $1 million, raising grievances from business executives who feel overwhelmed by these cumulative costs.
In 2023, Fisher Investments specifically highlighted the capital gains tax as a reason for moving its headquarters from Washington to Texas, while some companies opted to shift operations to nearby Bellevue to mitigate city payroll tax impacts.
Additionally, Washington state recently approved a new “millionaire tax,” set to impose a 9.9% tax on income exceeding $1 million starting in 2028—a significant change for a state that historically didn’t have a robust personal income tax system.
Schultz warns of a potentially dire economic future for Seattle and Washington state. “Cities and states don’t decline overnight,” he stated. “When safety, financial stability, and economic vitality start to deteriorate, they start drifting away.”
He added that while Washington once symbolized the future of the American economy, it could regain that status with renewed focus. However, he believes governments must understand that future entrepreneurs aren’t drawn to ineffective public systems or hostile political climates.
The newspaper has reached out to Mayor Wilson and Washington Governor Bob Ferguson for their responses to these comments.
