The controversial head tax supported (apparently) by a major of Seattle City Council members continues to garner national headlines and local consternation. We’ll run down some of the stories here.
The New York Times reports on the move that changed the debate trajectory.
Amazon abruptly escalated a fight with its hometown on Wednesday, halting major expansion plans in Seattle because of a tax being considered by the City Council.
The new tax would charge large employers in the city about $500 per employee, with the money going to help alleviate a housing crisis. The tax is squarely aimed at Amazon, which is Seattle’s largest employer and frequently blamed by many residents for the city’s soaring housing costs.
The company said it would halt construction of a new building it was planning to erect downtown and reconsider occupying another that is already under construction, putting 7,000 or more jobs in jeopardy.
As the NYT notes,
The decision took city officials and developers by surprise. In a statement, Seattle’s mayor said she was alarmed by Amazon’s announcement and added that she planned to work with members of Seattle’s business, labor and community leaders in the coming days to find common ground.
The Seattle Times report on the decision points out,
Amazon’s threat to pull back on its Seattle plans comes as the company is already branching out, said James Young, director of the Washington Center for Real Estate Research at the University of Washington.
“The fact that they have HQ2 already in process tells me that it’s a real option,” Young said, describing the company’s headquarters announcement in September as a warning shot for Seattle with the message, “Look, we can go elsewhere.”
Geek Wire reports that there are possibly a couple of ways to look at the company’s announcement.
In one scenario, Amazon is deciding whether it should slow or stop its rapid growth in Seattle, where left-leaning lawmakers are demanding big business shoulder more of the burden for the challenges associated with the boom. It’s a climate that tech leaders have called “unpredictable” at best and “hostile” at worst.
Seattle City Councilmember Teresa Mosqueda tells Geek Wire reporter Monica Nickelsburg that’s just not so.
“This is not a city or state that’s unfriendly to business,” she said in an interview with GeekWire.
A prominent local venture capitalist disagrees.
Heather Redman, a venture capitalist and vocal Seattle tech industry advocate, strongly believes in the first scenario. Here’s what she told GeekWire in the wake of Amazon’s announcement Wednesday:
I think [Amazon] will definitely stop or slow its growth in Seattle if the tax passes. I think there’s no question about that.
The debate would appear to center on how you view the first scenario, but Geek Wire lays out the other options, with good supporting discussion. Here’s what they are:
In the second scenario, Amazon is pausing just two of several construction projects underway to pressure the City Council in advance of its May 14 vote on the head tax…
There is also a third possibility: Amazon genuinely doesn’t know what its future in Seattle looks like. Amazon could be pausing construction on a few of its projects to simply wait and see what happens, while building up its outposts in cities like Vancouver and Boston and deciding where to plant HQ2.
We recommend the story. After Amazon’s decision became known, city councilmembers supporting the tax issued a press release.
For an insight into the council’s thinking, the press release is must reading. The SCC Insight blog by Kevin Schofield does a thorough job of analyzing yesterday’s developments. Of the councilmembers’ statement, he writes,
In it they said:
“This was never a proposal targeting one company, but Amazon made the conversation about them when they expressed their intentions to pause construction on their new office tower pending a vote on our Progressive Tax on Business.”
And yet, in the same press release they quote Amazon’s recent earnings reports, and note that “Seattle has become the nation’s biggest company town.” Also, let’s not forget that Amazon alone will pay about 26% of the total revenues raised by the new tax. Or that Sawant has spearheaded an organized “Tax Amazon!” movement, including a protest outside Amazon’s headquarters with activists literally waving “Tax Amazon” signs. Explain to me again how this was never a proposal targeting one company…
Seattle Times editorial columnist Brier Dudley broke the story of Amazon’s construction pause. He writes,
Whether it’s just a political maneuver to influence City Hall’s upcoming vote on a head tax or an actual change in direction remains to be seen. But it could spook developers of housing and offices planning on Amazon’s continued growth.
Either way, Amazon is providing a dramatic display of what may happen if city officials continue blaming large companies for the city’s inability to adequately plan for growth or address the homeless crisis, despite huge increases in public spending on the latter.
His column should also be read in its entirety. He concludes,
Seattle’s treatment of its most successful homegrown companies is telling businesses of all sizes whether it remains a good place to create jobs and build their future.
Crosscut has more, including this.
Reacting Wednesday, Marilyn Strickland, CEO of the Seattle Metropolitan Chamber of Commerce, framed the news as a warning. “Today’s announcement shows that Seattle cannot take its economic prosperity for granted,” she said in a statement. “The City of Seattle has abundant tax resources today because many locally based businesses have chosen to grow here. That’s why we urge the City Council to prioritize those resources—including over $700 million in taxes paid by business each year — before pursuing new revenue, and work with regional partners to develop a coordinated plan that will significantly reduce homelessness.”
An op-ed by three business owners points out that business has done much to help the city’s homeless.
Businesses are already participating in a big way to help resolve the homeless crisis in our community. Large cash and in-kind donations are made to charities showing measurable success, specifically those helping individuals escape homelessness. Examples include permanent, rent-free facilities for FareStart and Mary’s Place, pro-bono services and grants.
Saying that the “city has proved that spending money in an effort to improve the homeless crisis in Seattle is not its core competency,” they conclude,
We would become the only jurisdiction in the country with a jobs tax and a B & O tax. However, if the Seattle City Council insists on moving forward, all new spending should be as efficient and effective as possible. Giving local business credit for their donations to measurably successful local charities will do exactly that.