As Seattle considers head tax to combat homelessness, a council member suggests … doubling it? Chamber says, slow down.

The Seattle City Council continues to consider a new head tax to fund programs to combat homelessness. We previously have written of the divisions on the issue among city leaders. The head tax is just one example of policies affecting city business that have been proposed. Yesterday we mentioned that at least one council member wants to revive consideration of a municipal bank

What happens in Seattle, as we’ve noted, is of interest throughout the state. A thriving, economically-vibrant Seattle drives much of the state economy. 

The Seattle Metropolitan Chamber of Commerce has argued against imposition of the head tax, which it calls a tax on jobs. Geek Wire reports that at least one city council member thinks the proposal is too low by half.

Seattle City Councilmember Kshama Sawant thinks that if Amazon plans to build a $5 billion second corporate headquarters, it can afford to pay more taxes in its hometown…

Sawant and her colleagues were discussing the Housing, Outreach, and Mass-Entry Shelter (HOMES) proposal, which would levy a tax of $100 per full-time employee, per year on businesses making more than $5 million in annual revenue. The tax’s sponsors say it would generate between $20-25 million a year to pay for affordable housing and homeless services.

“I think it should be larger,” Sawant said during Tuesday’s meeting. She later added, “at $200 we could raise over $50 million per year, every year.”

It’s simple multiplication, we guess, so imagine what could be done if the tax were $1,000 a head. The fallacy is that raising the tax would have not affect on job creation or investment. 

The Geek Wire story quotes the Seattle Chamber CEO.

The Seattle Metropolitan Chamber of Commerce is pushing back against the HOMES proposal, asking its members to write letters to the City Council to demand more transparency around existing homelessness programs. Seattle Chamber CEO Maud Daudon says she is not convinced that existing funding, like the Seattle Housing Levy, is going toward an approach that prioritizes permanent housing first.

“There has been no real dialogue here to gain understanding about what actually is being proposed,” Daudon told GeekWire in an interview. “There’s a lot of confusion but what we’ve heard, we have not been reassured that the investments are consistent with this new path.”

There’s the other side of the equation. It’s one thing to talk about the new money. It’s another to talk about whether the money would be well spent.

The Puget Sound Business Journal reports that the city’s homelessness crisis is already having a negative impact on business. So is the talk of new taxes.

Buffalo Industries, an industrial wiping cloth manufacturer that has been in Sodo since the 1940s, is moving the 30-plus employee business out of the city in part due to chronic homelessness in the neighborhood, President Mark Benezrasaid.

He and other business owners are frustrated by the way the city has handled the issue and by a city proposal to levy a $100-per-employee tax on companies that gross more than $5 million per year. Each year the tax would generate up to $24 million for homeless shelters, long-term housing and related services.

The city council is anti-business, Benezra said, so he plans to move Buffalo Industries out of the city limits.

It’s a challenging issue, without doubt, requiring a thoughtful response. The Chamber makes a good point:

The City needs to invest our resources wisely toward solutions that work, instead of pursuing a new tax on jobs. The Council has a nearly $70 million increase in the general fund over last year that it could use to address housing affordability. This money is in addition to last year’s $290 million Housing Levy—which the Chamber and the business community supported and helped pass—and a $29 million affordable housing bond Council added last year.

The metro area has seen significant increases in local tax revenues as a result of the dramatic increases in investment and retail sales driven by business expansion. A strong economy remains the best source of new revenues. In Seattle, growth pays for growth. The city may be approaching a tipping point.