Seattle passes smaller ‘head tax’ on big companies
by Monica Nickelsburg on May 14, 2018 at 4:10 pm
The Seattle City Council unanimously passed a smaller version of the controversial “head tax” on Amazon and other top-grossing businesses that has sent shockwaves through the tech industry and municipal government over the past few weeks.
At an impassioned meeting Monday afternoon, the Council approved an amendment establishing the tax of $275 per employee per year, from $500 previously, on companies with more than $20 million in annual revenue in the city. The amendment is the result of a compromise reached between Mayor Jenny Durkan and several sponsors of the originally proposed tax over the weekend. Under the amendment, the tax expires after five years with the option to renew it. Kshama Sawant was the only councilmember to vote against the amendment, but voted in support of the final tax after the smaller version was approved by her colleagues.
The tax that passed Monday will raise close to $50 million annually to fight the homelessness crisis. The Council’s spending plan allocates 60-70 percent for affordable housing and the remaining funds will go toward shelters and other homeless services
Last week, Amazon said it would resume paused construction on one of its office towers if the Council approved a $250 per employee tax. That original compromise was voted down Friday.
“We appreciate Mayor Durkan’s efforts to significantly modify the Council’s ill-conceived proposal to tax jobs in Seattle,” said Downtown Seattle Association CEO Jon Scholes in a statement, after Durkan introduced her original compromise. “A tax on jobs at any level is bad economic policy and will negatively impact Seattle’s economy and city tax revenues.”
Whether Amazon will accept the new $275 per-employee cost remains to be seen. The company did not comment on the new compromise when GeekWire asked ahead of Monday’s meeting. Under the amended tax, Amazon will be on the hook for about $11 million annually, rather than the $20 million that the original proposal would have levied.
The head tax has ignited something of an existential debate for Seattle over its monumental growth. With more than 40,000 employees and counting, Amazon is at the center of the conversation and the explicit target of Sawant, who has called the proposal “Tax Amazon Legislation.”
“Big businesses like Amazon have many tactics to avoid paying their fair share of taxes, and it has required true dedication and sacrifice from hundreds of us to bring us to this point. … If we had a stronger movement, that could have changed the balance of power between us and the goliaths even more, we could have won more,” Sawant said Monday. “If we had a weaker movement, we could have won less or even nothing.”
Two weeks ago, Amazon responded in kind, threatening to slow its growth in Seattle pending the City Council’s vote on the tax. The e-commerce giant
paused construction on one of its office towers and said it is reconsidering occupying another. The combined projects would house 7,000 new employees. Amazon’s plans in Seattle after today’s vote are not clear.
“When we start talking about changing that system that benefits some to make it more fair, there’s a lot of resistance,” Councilmember Mike O’Brien said during Monday’s meeting. “We have a lot more work to do.”
The city’s homeless population is growing, behind only New York and Los Angeles. With it, frustration over the City Council’s response to the homeless crisis grows. A
recent audit of King County’s response to the crisis gives weight to that view. It found that a lack of coordination between Seattle, surrounding cities, and the county creates inefficiency in the region’s homeless response.
“I think we have to convince the public that we’re using [funds] wisely and strategically, and I think we’ve failed in that regard as a city,” said Council President Bruce Harrell during Monday’s meeting.
But the city says homelessness is a moving target. Although more than 12,000 affordable units have been built, far more are necessary to house the growing population of people displaced by rising housing costs, which are bid up by an influx of well-paid tech workers and exacerbated by widespread single-family zoning.
A new report concluded that it would require about $400 million a year, conservatively, to solve the homelessness crisis in King County.
Mayor Jenny Durkan
said that Seattle currently spends about $70 million in annual direct investments to programs that fight homelessness in her first State of the City address.
Other estimates put that number at about $54 million in 2017.
Amazon says it has contributed a cumulative total of $40 million to Seattle’s affordable housing fund through fees associated with its real estate development in the city. Separately, the company has committed more than $40 million to two groups: the
Mary’s Place shelters for homeless families, including space in company buildings; and the
FareStart non-profit organization for homeless and disadvantaged men, women, and kids, including space and equipment for FareStart restaurants.
https://www.geekwire.com/2018/seatt...big-companies-will-compromise-appease-amazon/