By David Meyer
May 3, 2018

Amazon has suspended part of its expansion plans in Seattle, pending the outcome of a City Council vote on a new tax on large employers that would fund programs aimed at providing affordable housing and helping the homeless.

The company, which already employs more than 40,000 people in Seattle, has been planning a new 17-storey office tower that would house at least 7,000 new workers. But now the project is on hold, and Amazon is even threatening to sublease out all the space it’s leased in another building that’s already under construction.

It’s a bold political move on the part of Amazon, one of the biggest employers in Seattle. However, it’s also not a great look for a company whose soaring earnings just made CEO Jeff Bezos $12 billion richer in one day. Bezos, the world’s richest man, subsequently said the only way he could think of spending his vast fortune was to convert it into space travel.

Seattle’s City Council on Friday released new draft legislation that would tax large employers in order to raise $75 million next year to counter the effects of rising rents and house prices.

“Seattle is a city of great prosperity that has experienced tremendous growth of its economy and population,” the draft read. “However, this growth and prosperity has directly contributed to the rapid increase in the number of individuals and families experiencing homelessness.”

The city’s homeless are dying in ever greater numbers—169 last year, up by 32 from 2016.

Under the proposal, companies pulling in more than $20 million a year in the city would have to pay 26 cents for each hour worked by a local employee. This head tax would apply next year and in 2020, after which it would be replaced by a 0.7% payroll tax.

The Seattle Chamber of Commerce, whose members include big employers like Amazon, Microsoft and Boeing, opposes the measure because it is not confident the Council would “use new revenue wisely.”

“I can confirm that pending the outcome of the head-tax vote by City Council, Amazon has paused all construction planning on our Block 18 project in downtown Seattle and is evaluating options to sublease all space in our recently leased Rainier Square building,” Amazon VP Drew Herdener told the Seattle Times.

Seattle Mayor Jenny Durkan told the Seattle Times that she was “deeply concerned about the impact this decision will have on a large range of jobs—from our building trades, to restaurant workers, to nurses, manufacturing jobs and tech workers.”

However, she added: “At the same time, our city must urgently address our homelessness and affordability crisis and lift up those who have been left behind. I fundamentally believe we can do both by working together.”

Amazon is in the process of expanding in other locations, having recently announced 3,000 new jobs in Vancouver and 1,000 in Boston. It is also on the hunt for another North American city to host its “HQ2″—a second headquarters, that could give it even more leverage over the terms offered to it in the city where it all started.

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