Amazon Questions Growth In Region As Seattle Approves Head Tax
SEATTLE, WA – The Seattle City Council on Monday approved a new head tax, which will generate about $48 million to help address the city’s homelessness crisis. The head tax approved Monday is much lower than the one originally proposed, but it still angered Amazon, Seattle’s largest employer, to the point that an executive says the company is questioning its growth here.
The head tax passed by the Council Monday will charge companies with $20 million or more in gross annual receipts $275 per employee per year. That’s almost half the amount of a proposal that a Council committee approved on Friday, which would’ve charged $520 per employee per year, and made way for a permanent payroll tax. About 500 companies in the city will be subject to the tax.
Over the weekend, a majority of the Council worked with Mayor Jenny Durkan to come up with a compromise to avoid a mayoral veto. Durkan opposed the old $520 per employee tax proposal.
“This legislation will help us address our homelessness crisis without jeopardizing critical jobs,” Durkan said Monday afternoon. “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.”
Durkan faced serious pressure from the business community to crush the tax. Many businesses threatened to move jobs out of the city, but Amazon’s threat to stop planning construction on one of its Seattle office towers was the most notable protest.
On Monday, Amazon issued a bracing statement addressing the approval of a head tax. A vice president said the company is “very apprehensive about the future created by the Council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here.”
“We are disappointed by City Council’s decision today to introduce a tax on jobs,” Amazon Vice President Drew Herdener said in a statement. Herdener went on to say that Seattle has a “spending efficiency” problem, insinuating that the city’s revenue has been misspent.
Under the new plan, Amazon will have to pay about $12 million per year – as some have pointed out, a drop in the bucket for a company that earns billions. But Amazon is likely afraid that Seattle’s head tax will start a trend. The company is shopping for a city to locate its new HQ2. Amazon is looking for tax breaks, not tax increases.
At Monday’s meeting, a woman from Boston said during public comment that she wants to start a head tax movement in that city. Boston is one of the places Amazon is looking at for HQ2.
To address Seattle’s homelessness crisis, city leaders have few easy options. Businesses might move jobs out of the city, which would lead to a deflation of the head tax. At the same time, the high-paying jobs Amazon has brought to Seattle are a problem. Rents and other living costs have increased hugely over the past 10 years, forcing lower-income residents to leave or even into homelessness.
Durkan wants to increase the number of people who enter rapid rehousing, a program that places homeless people into permanent housing as quickly as possible. But there’s not enough affordable housing in Seattle and King County to rapidly rehouse the thousands of people living unsheltered.
A recent King County Auditor’s report found that the lack of affordable housing increases wait times, with the average person waiting about 75 days to get into a home. The auditor’s report also found that the homeless are competing with low-income people for the few affordable units available.
About 66 percent of the new head tax will go toward building new affordable housing units. The rest will go toward homeless services like shelter beds and trash cleanup, and pay raises for people who work with the homeless (they earn so little, they are “a paycheck away from being homeless themselves” according to Crosscut). King County has the third-highest number of homeless people in the U.S., behind only New York City and Los Angeles.
Here’s a recap of today’s meeting:
4:10 p.m. Council adopts the employee head tax ordinance 9-0. It will go into effect Jan. 1, 2019 at a rate of $275 per employee per year. The tax will generate about $48 million in the first year, which will be used for homeless services. Some of the money will go toward building affordable housing, other funds will to shelters, and providing parking for people living in cars and RVs.
3:52 p.m. Bagshaw amendment to exempt PolyClinic and other similar healthcare providers from head tax (because of the amount of care it provides) ADOPTED.
3:46 p.m. $275 head tax compromise amendment adopted 8-1. Sawant is only no vote. Final vote on the legislation still to come.
3:45 p.m. Debora Juarez says she won’t impugn her colleagues on the Council … but then she impugns Sawant. “You don’t just get what you want because you want it,” she said. Comprise is an example of “leadership” Juarez says.
“We worked hard, and if you can’t see that? I’m sorry,” Juarez said. “I don’t just give up and I don’t need a T-shirt to feel that.”
(Members of Sawant’s Socialist Alternative group wear T-shirts, but so do other groups in attendance, like SOS)
3:38 p.m. Kshama Sawant speaks. She points out “the movement” originally proposed a head tax generating $150 million per year. That was cut in half, and now has been cut in half again. She says the public should wonder “whose interest” the anti-head tax Council members (Harrell, Bagshaw, Johnson, and Debora Juarez) are working for.
Someone in the crowd shouted at Sawant a few times, accusing Sawant of telling people that the SOS group is a “terrorist” organization. Harrell warned the heckler she would be removed if it happened again.
3:33 p.m. Harrell says the city has not done a good job being transparent about how the city spends money on homelessness.
3:28 p.m. Councilwoman Teresa Mosqueda, a head tax sponsor, points out, as many have before, that taxation is extremely regressive in Washington and Seattle. The head tax is one way to balance the tax system. Calls compromise head tax a “down payment.”
3:18 p.m. Mike O’Brien, one of the original cosponsors of the head tax, says he thinks the best thing is to pass the measure un-amended. But, he’s still going to vote for the compromise.
“I’m acknowledging I’m going to vote for this because I’m settling for this level of service. With the nearly $50 million per year this will raise, there’s a lot we can do for people who are suffering out there.”
Councilwoman Lorena Gonzalez has similar thoughts. Sounds like the sponsors were told over the weekend Durkan would veto the $75 million measure. Also sounds like they couldn’t pull an ally from the anti-head tax side of the Council.
3:12 p.m. Councilwoman Lisa Herbold, a head tax sponsor, speaks first on the new $275 per employee compromise. She acknowledges it’s not enough to fix the homelessness crisis. She says other cities are looking to Seattle for a way to fix a strange problem: the strain placed on a city when you get an influx of high-paying jobs.
“Amendment 24 is he result of a lot of talking and listening over the weekend and a strong feeling that by Sunday evening this is the strongest proposal we were going to bring forward with the necessary votes to sustain a potential veto. I’ve been struggling with how I feel about this compromise because I’ve been really really focus on the spending plan and what the dire needs are in this community,” she says.
3:10 p.m. Harrell introduces Amendment 24, which is the new $275 per employee per year tax; it also removes the provision for a payroll tax, sunset date after 5 year, and that the city does an assessment of the tax. The lower tax would generate about $48 million per year.
3:06 p.m. Harrell ends public comment, and the discussion begins.
2:57 p.m. Members of the Women in Black group (they stand vigil when homeless people die). Speaker Queen Bee says 42 homeless have died in King County so far in 2018, wants the $75 million head tax plan to be approved. “This is an emergency it’s more than a crisis, we can’t accept a watered-down proposal.”
2:50 p.m. One man tells Councilman Rob Johnson he’s willing to “knock as many doors as it takes” to get him voted out of office (this man is solidly in favor of head tax, he doesn’t want to see it watered down).
2:46 p.m. A woman from Social Alternative named Emily McCarthy tells Council: “To all of the council members who co-sponsored the $75 million big business tax, do not capitulate to Jeff Bezos’ bullying … don’t water this down.”
2:43 p.m. A non-SOS speaker spoke in favor of head tax. She’s afraid her social security checks won’t cover housing costs in Seattle – and so she might become homeless herself.
2:36 p.m. Another SOS speaker says the city shouldn’t be allowed to ask for more money until there’s an audit of what’s already been spent.
After that speaker, Sawant says the SOS people cut in line to get into the meeting. “I’m urging we extend public comment by as much time as they took,” she says.
2:33 p.m. Another SOS speaker is super mad that there are homeless staying at a Seattle Jewish cemetery. He says he’s hired former members of the Israeli Defense Forces to keep the homeless out. He was jeered and laughed at by some in the audience.
2:27 p.m. A group of people from SOS now. Unidentified woman says, “We have watched with increasing concern as the city spent more and more each year” on homelessness, but the crisis only got worse. She says the group is not standing up FOR Amazon, but asking the city to show “accountability” before more tax dollars collected. SOS, by the way, hijacked a meeting in Ballard about the head tax two weeks ago.
2:25 p.m. Harrell kicks off public comment, reduces each speaker to one minute. First speaker is John Wisdom (sp?), from the group Speak Out Seattle (SOS). Wisdom says he speaks for the “silent supermajority” in Seattle opposed to head tax. SOS have made their own T-shirts.
2:12 p.m. The new $275/employee head tax proposal – introduced Monday morning, but no doubt hashed out over the weekend – has the support of everyone but Councilwoman Kshama Sawant, which means it’s headed to approval and Mayor Jenny Durkan can’t veto (if eight on Council vote yes, that’s a veto-proof supermajority).
2:07 p.m. Meeting starts, all Council members are present. The Council chambers is standing room only. Council President Bruce Harrell announces the Council will get through regular business before taking public comment on the head tax.
2:02 p.m. Like with most government meetings, this one hasn’t started on time. You can watch the meeting live here.
1:38 p.m. KIRO released the results of a poll showing that 54 percent of those surveyed oppose the tax. Also, a company is out with a new list today of the 25 places to live if you “love Amazon” – and Seattle came in No. 6.
1:19 p.m. There’s an extremely long line outside the City Council chambers for people who want to speak at the meeting. There was reportedly a disruption in the crowd as members of the group Safe Seattle apparently cut to the front of the line.