By David Meyer
May 15, 2018

Seattle is introducing a new tax on large employers that will help fund homelessness and affordable housing programs—despite opposition from companies such as Amazon.

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.

“We are disappointed by today’s City Council decision to introduce a tax on jobs,” Amazon said in a statement. “While we have resumed construction planning for Block 18, we remain 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.”

Seattle has a serious homelessness problem that has been exacerbated by the growth in high-paying jobs there, thanks to big employers such as Amazon, Microsoft and Boeing.

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. 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 annual proceeds of the tax were originally calculated at $75 million before the council revised its estimates.)

However, with Mayor Jenny Durkan threatening to veto the tax because she was concerned about its impact on employment, the measure had to be watered down to pass.

In the end, the version that passed—unanimously—will see large employers pay 14 cents per head per hour, or $275 per head per year. The tax will now generate $47 million a year, and it will run for five years, rather than turning into a payroll tax after a two-year run.

“This legislation will help us address our homelessness crisis without jeopardizing critical jobs. 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.

Three-fifths of the money raised will go to building new, affordable housing, while the rest will fund emergency services for the homeless.

Amazon wasn’t the only company left grumbling. Starbucks also responded, with public affairs chief John Kelley saying Seattle “continues to spend without reforming and fail without accountability, while ignoring the plight of hundreds of children sleeping outside.”

“If they cannot provide a warm meal and safe bed to a five year-old child, no one believes they will be able to make housing affordable or address opiate addiction,” Kelley said.

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