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Friction over growth drives Seattle conflict over employer tax

15 May 2018

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.

"I've been really struggling with how I feel about this compromise because I've been really, really focused on the spending plan and the dire needs of our communities", co-sponsor of the original legislation Lisa Herbold said before the vote.

Noting that the so-called "head tax" is quite modest relative to Amazon's annual revenue and the pay of its CEO Jeff Bezos-the world's richest man-socialist Seattle City Councilmember Kshama Sawant argued on Monday that "even a smaller tax is a huge victory", given the "Goliath-like clout of Amazon".

The tech company had threatened to withdraw investment in a new skyscraper under the original bill, which called for a $500 per head tax.

Republican State Senator Mark Schoesler says he will be taking action against the tax, introducing legislation that says it is an unauthorized tax unless approved by legislature, which "reinforces current law". The tax, which will be $275 year per full-time employee, is expected to bring in about $45 million a year to put toward homelessness services and affordable housing.

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Several members of the nine-person City Council said they were reluctantly voting in favor of the smaller tax because there were not enough votes to override a mayoral veto of the larger tax plan.

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.

Head taxes are extremely rare in the US and the ones in place are a fraction of Seattle's proposal. The tax will be $275 per employee per year with a sunset clause of January 1, 2024. She said she ultimately supported the compromise because it creates "a significant new revenue stream" to build more affordable housing.

"P$3 ending the outcome of the head-tax vote by City Council, Amazon has paused all construction planning", a company spokesperson told The Seattle Times earlier this month.

The Seattle Chamber of Commerce criticized the tax, calling it an unfair burden on business owners who have already seen the city increase the minimum wage and pass mandated sick and family leave ordinances. After that, it would have risen to an estimated $39 million a year. King County, which includes Seattle, recorded a record 169 homeless deaths a year ago.

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The city spent $68 million on homelessness past year, according to NBC.

Other cities have implemented similar taxes, but critics say Seattle's tax could threaten the booming local economy and drive away jobs.

While Amazon has resumed construction planning on the downtown building, he said "we 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".

The city's homeless population is growing, behind only NY and Los Angeles.

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Friction over growth drives Seattle conflict over employer tax