Seattle residents gathered last Wednesday to protest a proposed head tax that would force large corporations to help fund services for the city’s growing homeless population.
If the proposal is approved, large corporations in Seattle would be required to pay 26 cents per hour for each employee. For Amazon, which employs 45,000 people in the city, that tax could be as high as $20 million per year. That figure would jump to an estimated $39 million when the head tax switches to a 0.7% payroll tax in 2021.
It’s no secret how Amazon CEO Jeff Bezos feels about taxes, and the company has already threatened to pause a major expansion to its operations in the city if the proposal is approved (a move that could cost Seattle 7,000 jobs). Amazon also said it is reconsidering occupying another building that is already under construction.
The situation is incredibly difficult for Seattle, which has to choose between taxing employers (and potentially driving those employers out of town) or increasing taxes on voters, which could exacerbate the problem it is trying to solve.
Supporters of the proposal insist Amazon's presence in Seattle has contributed to higher rents that have pushed people into the streets. “We need companies that are profitable and making billions of dollars every year to help with the folks that are being forced out of housing and ending up on the street,” says Seattle lawmaker Mike O’Brien.
Others point to Seattle's backwards tax policies, which prevent the city from taxing income or capital gains. The city also has a law in place that blocks it from increasing property tax by more than 1% each year. And with policies that require voters to individually approve everything from schools to bike lanes, the city has few options to come up with the money it needs to help the homeless.
By scale, the homeless crisis in Seattle is worse than that of New York City and LA. Over the past 10 years, the median rent in Seattle has increased 3x faster than the national average to reach $2,400. Last year, the city broke records in terms of the number of homeless people to die on the street.
As major cities throughout the country battle to become the location of Amazon's "H2Q," they would do well to watch the problems Seattle is now facing.
“The more desperate cities become, the more leverage corporations will wield over them. And, simultaneously, the more frustrated their populations will get at the constant tax raises and fee hikes,” notes Huffington Post.
Seattle's City Council seems largely undeterred by Amazon's threats and will vote on the proposal on May 14th. The Council has enough support to pass the measure, but it is unclear whether Mayor Jenny Durkan will use her veto power if given the opportunity.
Author’s Note: Seattle’s homeless crisis was caused by incompetence and mismanagement, not by corporations. While it would be kind of Amazon to help pay for the construction of homeless shelters and other services, the company has no obligation to do so and has every right to leave the city.