Seattle Scales Back Tax in Face of Amazon's Revolt, but Tensions Linger


The Seattle City Council unanimously passed a tax on large employers Monday that will aid the city's homeless residents - but not before slashing the proposal almost in half over opposition from Amazon, which is headquartered in Seattle, and a veto threat from Mayor Jenny Durkan. Representatives of businesses warned that the tax would drive employers out of town, while others speakers questioned whether Seattle's city government could be trusted to spend the additional tax revenue wisely. Amazon on Monday declined further comment. Gonzalez says the new terms will be $275 a head to raise between $45 million and $49 million a year, with a sunset clause January 1, 2024.

The ordinance will impose a $275-per-employee tax on for-profit companies in Seattle that make $20 million or more.

He noted that Seattle revenue has grown dramatically and that the city "does not have a revenue problem - it has a spending efficiency problem".

Proponents on the city council reluctantly agreed to reduce the scope of the bills, which originally called for a tax of 26 cents per employee hour to raise about $75 million annually.

While supporters said the head tax was necessary to fund efforts to address a housing crisis and rising homelessness in the city, the measure was met with near-universal opposition from businesses, as well as the Seattle Metropolitan Chamber of Commerce. Under the amendment, the tax expires after five years with the option to renew it. Kshama Sawant was the only councilmember to vote against the amendment, but voted in support of the final tax after the smaller version was approved by her colleagues.

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Amazon's Herdener said the company will resume construction planning on the office tower it had paused. Seattle Mayor Jenny Durkan had vowed to veto the larger tax. "We'll be back for more!" A recent audit of King County's response to the crisis gives weight to that view.

"By threatening Seattle over this tax, Amazon is sending a message to all of our cities: we play by our own rules", the letter said.

But the city says homelessness is a moving target.

It would only impact businesses with over $20 million a year in gross revenue. A point-in-time count a year ago tallied more than 11,600 homeless people in King County. 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.

Outside of Seattle, King County's 2018 budget for homelessness spending was $66.9 million, which includes funding for emergency shelter, prevention, supportive housing, rapid re-housing, transitional housing, and other homeless housing programs and supportive services. Separately, the company has committed more than $40 million to two groups: the Mary's Place shelters for homeless families, including space in company buildings; and the FareStart non-profit organization for homeless and disadvantaged men, women, and kids, including space and equipment for FareStart restaurants.