In a unanimous decision (9-0) yesterday, the Seattle City Council approved a version of the “head tax” plan—a progressive tax on big businesses to combat homelessness in the city—putting an end to months of fierce debate.
Those opposing the legislation claim the tax is aimed at jobs, or hiring in general. Technically, it’s a tax on time: calculated by multiplying working hours by about 26 cents for full-time employees (defined as 480 or more hours per quarter) at Seattle businesses generating over $20 million in revenue per year. Less than three percent of firms in the area are estimated to be affected. Still, the “head tax” monicker stuck, and while earlier versions were estimated to carve out $540 per employee, what passed yesterday will bring that closer to $275 for every full-timer at the most prosperous employers. In total, about $47 million per year.
Homelessness in Seattle was declared a state of emergency in late 2015, and funds from the head tax are earmarked for affordable housing units and homeless services.
Amazon—which has borne the brunt of the blame for the massive cost of living increase in Seattle—balked at the proposed tax earlier this month, halting construction on an office building in Downtown Seattle estimated to bring an additional 7,000 jobs. Activists later projected the words “Alexa, is Bezos bullying Seattle?” on the facade of the stalled construction site.
Besides benefitting greatly from state and local subsidies, Washington has no income tax—and legislation proposed in 2010 to create a tax on the wealthiest individuals and households in the state was defeated due, at least in part, to a $100,000 contribution to the Defeat 1098 campaign from Jeff Bezos. Amazon made $5.6 billion in profits last year alone, and paid effectively nothing in federal taxes. Bezos remains the richest man, running the second-most valuable company.
“We are disappointed by today’s City Council decision to introduce a tax on jobs,” Amazon spokesperson Drew Herdener told Gizmodo, “we remain very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here.”
Amazon has resumed construction on the stalled office building.