Amazon makes vague threat after Seattle passes new "head tax"

Protesters attend the Seattle City Council finance committee meeting Friday May 11. The committee voted 5-4 to reject Mayor Jenny Durkan’s proposal of a more modest tax on large employers to address the city’s homelessness crisis.(Steve Ringman  The

Seattle City Council votes 9-0 for scaled-down head tax on large employers

In 2017, the city counted 8,522 homeless people. This "head tax" was to apply over 2019 and 2020, generating $86 million a year for social programs, before turning into a 0.7% payroll tax.

The council convened a 17-member Progressive Revenue Task Force, which in March published a report calling for an EHT that would raise at least $75 million. The tax will provide additional revenue.

The battle between Amazon and head tax supporters may also be watched closely by cities in North America that have been courting the company for its second headquarters.

The mayor, councilmembers and city staff spent the weekend working on a compromise that everyone could agree on.

A broader tax proposal prompted the tech company to halt construction on one Seattle office tower and put off a lease of another tower.

"A tax on jobs at any level is bad economic policy and will negatively impact Seattle's economy and city tax revenues", Downtown Seattle Association spokesperson James Sido wrote in a statement. This is the richest city in the state and in a state that has the most regressive tax system in the country, " said council member Teresa Mosqueda, a co-sponsor of the measure who said the plan gives the opportunity to build the housing the city needs.

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The city spent $68 million on homelessness previous year, according to NBC.

Sponsors of the tax said Seattle's biggest-earning businesses should bear some burden for easing a shortage in low-priced housing that they helped create by driving up real estate prices to the point where the working poor and many middle-class families can no longer afford to live in the city.

"If sweeps need to stop", Sawant said, "then take a stand that sweeps need to stop".

For the past few weeks, the city has been considering a $500 "head tax" on businesses with more than $20 million in annual revenue, a price tag that led Amazon to pause construction on its Block 18 office tower and reconsider whether it will move into the massive Rainier Square office complex.

Shannon Brown, 55, who has been living a tiny home at a south Seattle homeless encampment, said there's simply not enough housing for the city's poorest people. 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.

"Make no mistake", Sawant said, "money is power under capitalism". "No one is saying that this will solve everything, but it will make a meaningful difference".

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That "head tax" formula is created to raise $45 million to $49 million a year over the five-year life of the tax - down from an original $75 million annually - to build more affordable housing and support services for the homeless.

Durkan, many businesses such as Amazon and construction-worker unions opposed it, as did Council President Bruce Harrell, Councilmembers Sally Bagshaw, Debora Juarez and Rob Johnson and some voters critical of how City Hall has been spending money.

But Seattle's Chamber of Commerce said that "taxing jobs will not fix our region's housing and homelessness problems".

Despite letters from hundreds of business leaders opposing the tax, in an initial vote Friday the nine-member panel passed the $500-per-employee tax.

Although many agreed that Seattle needed to address the city's crisis over homelessness, they differed about the merits of the tax. "Because this ordinance represents a true shared solution, and because it lifts up those who have been left behind while also ensuring accountability and transparency, I plan to sign this legislation into law", said Durkan. "We are highly uncertain whether the City Council's anti-business positions or its spending inefficiency will change for the better", Amazon Vice President Drew Herdener said in a statement.

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