Starbucks, Amazon tee off on Seattle's new head tax

Seattle City Councilmembers debate dueling head-tax proposals on Friday May 11

Seattle City Council Passes $45 Million Head Tax Compromise

The tax would begin in 2019 and raise about $48 million a year to pay for affordable housing and homeless services.

A proposal to tax companies $500 per employee was being considered for several weeks but, after Mayor Jenny Durkan threatened to veto it, the council voted to reduce the size of the tax. Some construction workers opposed the tax out of concern for their jobs while supporters pressed the council to do something about the rapidly expanding number of homeless families in the city.

While Amazon's share of the head tax - proposed at 26 cents per employee per hour in the $75 million plan - would have been about $20 million, councilmembers that voted against it cited the impact it would have on other businesses.

In addition, the compromise legislation is set to sunset after five years, unlike the initial proposal, which had no end date. Neither side supported the compromise, and most speakers blamed city leaders for an escalating homelessness crisis that has seen city sidewalks, parks and roadsides packed with tents and shacks.

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In a separate 5-4 vote, the council recommended spending two-thirds of the new tax revenue to build and operate low-income housing units. The remainder would go to homeless services, including shelter beds, camps and overnight parking.

In a 8-1 vote, the council - some reluctantly - chose a new version of the plan introduced as Amendment 24 during the afternoon full council session with sponsorship from eight of the nine members - all save Capitol Hill's District 3 rep, Kshama Sawant.

That's despite Amazon founder and CEO Jeff Bezos' claim last month that he has too much money to spend.

The issue took on national importance because Amazon is in the midst of a high-profile search for a second headquarters in one of 20 other cities.

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Amazon vice president Drew Herdener said the company was "disappointed", and "uncertain" that the climate for businesses would get better. "While we have resumed construction planning for Block 18, 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".

"There is no way this tax will be a burden on big business in Seattle", she said before the vote.

Proponents say people are dying on the streets, and while city-funded programs found homes for 3,400 people a year ago, the problem deepens.

"When I looked at this new revenue tax stream, I think we have to convince the public that we are using it wisely and strategically, and I think we've failed in that regard as a city", he said. The council would have needed an additional councilmember to change their no vote to a yes in order to prevent a veto. As it passed, socialists pushing for a larger tax broke out in a chant: "We'll be back for more!"

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