Seattle City Council passes $275 employee tax

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Amazon's dissatisfaction with Seattle ups the ante for whichever city gets tapped for the company's second headquarters. But as we have also noted before, "Seattle, home of "HQ1" is less than enthusiastic about the company", as a new story from Seattle attests.

This disclosure comes amidst a pushback by the online retail giant against a proposal by the Seattle City Council which aims to tax large corporations based on the number of employees. Tensions are still high.

To fight back against the problem, the city council unanimously voted in favor of the new tax plan Monday, charging businesses that make more than US$20 million in gross revenue with a US$275 tax a year per each full-time worker they have, lower than the US$500 initially demanded, starting in 2019.

She had offered an amendment to essentially cut the original$75 million tax proposal in half, but her proposal was rejected last Friday.

After getting moved to a vote by the city's Finance and Neighborhoods Committee (passed narrowly 5-4), Seattle Mayor Jenny Durkan released a statement that she could not support the tax.

While the politics may be fractious, the gravity of Seattle's housing crisis is well understood.

According to a recent McKinsey and Company report on the King County's homelessness issue, the region would have to spend between $360 and $410 million to combat current levels of the problem. The Institute for Children, Poverty & Homelessness found that in the 2015-2016 school year, one in 16 children in Seattle were homeless. "This is the richest city in the state and in a state that has the most regressive tax system in the country", said councilmember Teresa Mosqueda, who wanted a heftier tax. "They are dying on our streets today because there is not enough shelter". The so-called "head tax" would raise roughly $48 million a year to build new affordable housing units and provide emergency homeless services. The total will increase if Amazon follows through on plans to expand its headcount in the city within the next few years.

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"This not just an Amazon tax, this is a tax on these family owned grocers, and stores like..."

Sawant would be wiser to regard Amazon's response not as extortion but as a harbinger of things to come, if the anti-business climate persists. Amazon, individually, will have to pay about $10 million.

It has been watched closely by other cities amid a highly publicized search for a second North American headquarters by Amazon, the world's largest online retailer with first-quarter revenues of almost $50 billion.

While Amazon has resumed construction planning on the downtown building, company officials "remain apprehensive about the future created by the council's hostile approach and rhetoric toward larger businesses, which forces us to question our growth here", said Drew Herdener, Amazon's vice president for global corporate and operations communications. Starbucks, which had fourth-quarter profits a year ago of $788.5 million, was also loud in its opposition.

"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", says Starbucks' John Kelly, a top public-affairs executive. Per Sawant Amazon is not exclusively to blame for the problem of homelessness in the city though it has employed hardball tactics. "It certainly doesn't send a message that you expect to be a part of the community".

Former CKE Restaurants CEO Andy Puzder on Amazon's "disappointment" over the passing of Seattle's new head tax.

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