Seattle City Council approves controversial head tax on large businesses

ImageAmazon had halted two major expansion projects in Seattle in protest over the original

ImageAmazon had halted two major expansion projects in Seattle in protest over the original

Overcoming weeks of extortionist threats and other forms of "corporate bullying" from the world's largest retailer, Seattle's City Council on Monday unanimously approved a new tax on Amazon-which paid nothing in federal income taxes last year-and other major companies in an effort to provide essential services for the homeless and combat the local housing crisis. "A tax on jobs at any level is bad economic policy and will negatively impact Seattle's economy and city tax revenues".

That's down from the $75 million a year the original proposal would have generated by imposing a $540 head tax per employee for the next few years, after which it would be converted to a 0.7% payroll tax.

Supporters and opponents of Seattle's head tax pack City Council chambers for Monday's vote.

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".

Three-fifths of the money raised will go to building new, affordable housing, while the rest will fund emergency services for the homeless.

City coffers are expected to receive around $48million per year under the new proposal, down from $80million under the original.

Mayor Jenny Durkan said that Seattle now spends about $70 million in annual direct investments to programs that fight homelessness in her first State of the City address.

ImageThe new tax — dubbed the “Amazon tax” by locals — will fund affordable housing and homeless
ImageThe new tax — dubbed the “Amazon tax” by locals — will fund affordable housing and homeless

Head taxes are extremely rare in the USA and the ones in place are a fraction of Seattle's proposal.

Bezos also halted two construction projects in Seattle pending the outcome of the head-tax debate, which Sawant called extortion.

About 3 percent of Seattle businesses will be affected and the tax will raise about $47 million per year, according to the council. In Denver, there is a $50-per-year tax for a full-time employee, while Chicago Mayor Rahm Emanuel scrapped the Windy City's tax after calling it a job killer. The 17-story building, which will have 1 million square feet of office space, is meant to house between 7,000 and 8,000 new employees. At that time the city will evaluate whether or not to renew the tax.

The tax that was passed Monday was actually a compromise negotiated between Councilmember Lorena Gonzalez and Mayor Jenny Durkan over the weekend. King County, which includes Seattle, recorded a record 169 homeless deaths past year. 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.

Even though the company chose to resume one of its building projects, Drew Herdener, an Amazon vice president, said in a statement, "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".

Criticism from Starbucks comes on the heels of a statement Amazon issued saying it is "very apprehensive" about its future in Seattle because of the city's "hostile approach and rhetoric toward larger businesses".

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