Published: Wed, June 13, 2018
Markets | By Otis Pena

Seattle may now kill the 'Amazon tax' it just passed

Seattle may now kill the 'Amazon tax' it just passed

"Today's vote by the Seattle City Council to repeal the tax on job creation is the right decision for the region's economic prosperity".

Seattle's tax would have charged companies about $275 per full-time worker each year and raise roughly $48 million a year for affordable housing and homeless services.

But late Monday, Mayor Jenny Durkan and City Council President Bruce Harrell, who decided on the reversal over the weekend, issued statements signaling the reversal and repeal of the "head tax" that the Seattle City Council approved 9-0 last month.

O'Brien: "We know that last time, Seattle suburbs were not running against their opponent; they were running against the Seattle City Council".

The head tax would have imposed a $275 per employee on businesses that bring in $20 million or more annually, affecting about 3 percent or 585 of the city's companies. Following Tuesday's repeal, the company released a statement in support of council's vote. The vote capped more contentious debate at Seattle City Hall, in which several speakers accused the local government of bending to the whims of Amazon. "The system is not working for them, and disrupting it is the only thing they can do".

Tax experts say the reversal underscores the limited leverage that cities across the country have over corporations such as Amazon, which helped wage an intense public relations campaign to turn the public against the tax.

But Councilwoman Lisa Herbold said she was reluctantly voting for repeal rather than drag the city through a political fight she called "not winnable at this particular time".

During the City Council meeting, Sawant added: "Why is the council surprised this is happening?" A spokesman for Amazon declined to comment.

Amazon was the explicit target of Seattle City Councilmember Kshama Sawant and her supporters, who carried signs reading "Tax Amazon" and marched on the e-commerce giant's campus in support of the head tax.

Monday, Mosqueda said she could not support any repeal that did not include a replacement plan.

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Starbucks, another large Seattle tech company that opposed the head tax, is hosting a "Summit on Family Homelessness" next Tuesday in Seattle.

About two-thirds of the new revenue from the tax would be directed toward housing in the city. Durkan and some other council members argued the funding should focus more on shelter in order to make an immediate dent in the visible problem of unsheltered homelessness. The council also used one-time funding last fall for homeless services, after council members rejected another business tax proposal. Amazon, Vulcan, and Starbucks each pledged $25,000 to fund the group gathering signatures to put the head tax to a vote this November.

The Council passed the resolution to repeal the tax 7-2.

The repeal vote passed, negating the need for a referendum.

The vote showed Amazon's ability to aggressively push back on government taxes, especially in its affluent hometown where it's the largest employer with more than 45,000 workers and where some have criticized it for helping cultivate a widening income gap that is pricing lower-income employees out of housing.

Another council member who flipped from her previous support for the head tax, Lorena González said "nobody wants to talk about how we pay" for homelessness solutions. But to the mayor's progressive critics, Durkan gave up the fight too soon.

Under that plan, the majority of the money would have gone toward building 591 units of permanent supportive housing over five years. But that measure was struck down by the courts as illegal under state law, according to Richard Auxier, an analyst at the nonpartisan Tax Policy Center. He challenges accusations that the city is wasting taxpayer dollars and failing to address the homelessness crisis. "While a vote may go forward to repeal the tax, our homelessness and housing affordability crisis gets worse", Mosqueda said.

So the tax was going on the ballot and there was every indication it was going to lose. "It's a very uncomfortable position to be in".

"I think we have to understand that the logic of bowing to big business points only in one direction, to a race to the bottom for the rest of us", she said.

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