Published: Tue, May 15, 2018
Economy | By Melissa Porter

Seattle tax showdown with Amazon coming to a head

Seattle tax showdown with Amazon coming to a head

Seattle's latest tax proposal to combat homelessness takes aim at large businesses such as Amazon that have helped drive the city's economic boom.

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.

That's down from the $75 million a year the original proposal would have generated by imposing a $540 head tax per employee for the next few years, after which it would be converted to a 0.7% payroll tax. Some construction workers opposed the tax out of concern for their jobs while supporters pressed the council to do something about the rapidly expanding number of homeless families in the city.

Amazon's threat to pause its expansion in Seattle comes as 20 cities vie to lure the company's second headquarters and as it expands its workforce in Boston and Vancouver, British Columbia.

Seattle City Council is now in an ambiguous position, which is stuck between the capitalist realities and socialist dreams owned by Seattle. Seattle faces an impossible choice: Either raise revenue from employers and risk driving them away, or keep levying taxes on voters and risk a backlash that could exacerbate the very problem it's trying to solve.

"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. The tax is projected to generate about $48m a year to address a housing crisis spurred on by Amazon's rapid growth.

Residents showed up two hours before the vote Monday to wait in line and claim a space in the chamber, which was packed to capacity.

The "head tax" refers to a $500 per-person tariff the city wants to impose on big-businesses that will help pay for social programs like caring for the homeless.

The City Council backed a compromise plan that will charge large businesses about $275 per full-time worker each year, lower than the $500 per worker initially proposed. "So you're either well-off and hungry or homeless and well fed". One-fifth would go toward shelter beds, tiny homes, hygiene, garbage cleanup and other homeless services.

Sawant even suggested doubling Seattle's proposed employee head tax during the city council committee meeting, but that also failed, by an 8-1 vote.

"As a union rep, we meet with our employers to discuss our problems and come up with solutions jointly", Bufford said.

Some opponents of the measure called for greater accountability on how funds addressing homelessness are spent.

As a result of the new request for proposals process implemented last year, the contracts last a year, but the city says it assesses the service providers quarterly to determine whether the providers are meeting performance targets.

Seattle declared a civil state of emergency over homelessness in late 2015. A year ago 169 homeless people died in the city where winter temperatures can fall to minus 7 degrees. The median price for a house is now $777,000. Saturday, councilmember Sawant led a march on Amazon's headquarters urging passage of the tax.

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