Published: Wed, May 16, 2018
Markets | By Otis Pena

It's Seattle's Government, Not Amazon, Causing a Housing Crisis

It's Seattle's Government, Not Amazon, Causing a Housing Crisis

Seattle's city council on Monday approved a new tax for the city's biggest companies, including Inc, to combat a housing crisis attributed in part to a local economic boom that has driven up real estate costs at the expense of the working class.

Kniech joined more than 50 local lawmakers who sent an open letter to Seattle leaders and residents on Monday, supporting the tax and criticizing Amazon's resistance. Sponsors of the tax said Seattle's biggest-earning businesses should bear some burden for easing a shortage in low-priced housing that they helped create by driving up real estate prices to the point where the working poor and many middle-class families can no longer afford to live in the city.

The council expects to collect about US$48 million a year from this tax, which would be used for pay for affordable housing programs and emergency homeless services.

Almost a decade ago, the council repealed a head tax of $25 per employee per year because of the challenge it presented to businesses during the recession. Amazon paid $250 million in local taxes past year and has now paused a construction project in Downtown Seattle, pending the outcome of this vote.

In a statement released Tuesday morning, Starbucks Vice President Drew Herdener attacked the city for failing to practice fiscal restraint, and instead punishing businesses for what is ultimately the city's failure. Following the vote, an Amazon spokesperson indicated the company will continue construction but will remain cautious in the midst of the council's "hostile approach and rhetoric toward larger businesses". It replaces what had been a proposed $500-per-head tax.

"City of Seattle revenues have grown dramatically from $2.8 billion in 2010 to $4.2 billion in 2017, and they will be even higher in 2018". The Seattle business community was almost universally opposed to the tax, according to Nelson.

He said Seattle "does not have a revenue problem - it has a spending efficiency problem".

And Starbucks, the other giant from Seattle, isn't happy either, and its management doesn't think the council will actually be able to administer the tax and provide people in need with promised benefits.

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"If they can not provide a warm meal and safe bed to a 5-year-old child, no one believes they will be able to make housing affordable or address opiate addiction", said John Kelly, Starbucks' senior vice president of global public affairs and social impact. "If they can not 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".

But as the big Seattle companies, which are among the biggest in the USA and the world, are criticizing the legislation, supporters of the law, such as workers unions and church groups, said the tax would help the critical housing situation of the city, as the income gap increases and makes it more hard for the working class to pay rent.

"People are dying on the doorsteps of prosperity".

Amazon said it is still evaluating whether to sub-lease space in a second future office tower in Seattle, a project called Rainier Square, meaning it may move some planned jobs elsewhere and thus avoid further raising its tax liability.

Amazon is not alone in its stance; Zillow, Starbucks and 131 businesses including Redbox, SmartLabs and Expedia all have expressed their concern and disappointment over the council's decision to penalize the city's job creators.

For Seattle's liberal City Council, the discussion centered not so much on whether there should be a head tax but how big it should be.

Tax proponents have said too many people are suffering on the streets and that the problem is deepening even though city-funded programs found homes for 3,400 people a year ago.

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