Amazon, Seattle Employers Face New Tax to Curb Homelessness

15 May, 2018, 22:35 | Author: Salvatore Jensen
  • Seattle approves plan for 'reasonable' tax on its largest businesses to help pay for housing, homelessness

Following a weekend of negotiations between Seattle City Council members and Mayor Jenny Durkan, the council voted unanimously Monday to adopt a new tax on the city's largest employers to help address homelessness.

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.

Criticism from Starbucks comes on the heels of a statement Amazon issued saying it is "very apprehensive" about its future in Seattle because of the city's "hostile approach and rhetoric toward larger businesses". It was still exploring the possibility of subleasing a second building that a developer is now building.

So, at the end of April, the Seattle City Council released draft legislation that would force companies with revenues of over $20 million in the city to pay 26 cents for each hour worked by a Seattle-based employee, or roughly $540 per head per year.

There will also be $14.6 million in workforce stability funding over five years, providing a 4 percent raise for direct service homeless contracts.

However, the version of the tax that the City Council agreed to on Monday will be far less onerous than the draft that led Amazon to suspend construction on a new office tower in a not-so-subtle threat over providing further employment in Seattle. The Seattle region had the third-highest number of homeless people in the US and saw 169 homeless deaths in 2017. So, with another social ill infesting the city, how will Seattle combat it? But its most vocal critic may have been Amazon, which threatened to stop construction on new facilities in the city and put 7,000 jobs on hold over the tax proposal. "It certainly doesn't send a message that you expect to be a part of the community".




Amazon was the main target of the campaign for establishing an employee head tax in Seattle.

Will "Amazon tax" cost jobs in Seattle?

Almost 600 employers - about 3 percent of all Seattle businesses - would pay the tax starting in 2019. A count previous year found King County's homeless population to have reached more than 11,000, and a pro bono report issued last week by McKinsey & Co. for the Seattle Chamber of Commerce found that it would cost about $400 million to address the shortage of affordable housing in the area.

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.

Council member Lorena González, a co-sponsor of the bill, said in a hearing before the vote, "It is regrettable we weren't able to find a path amongst our colleagues and the mayor that they would be able to support a higher taxation rate".

The original proposal would've charged around $500 per full-time employee instead of $275, which would've brought up to $86 million a year into city coffers, per new estimates; Durkan had said she would've vetoed that measure. But she said she was proud the plan for a new tax had "evolved more towards progressivity" and would do things like protect the city's small businesses.

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