Well, that was fast. Faced with an intense backlash from Amazon and other businesses, Seattle’s city council voted Tuesday to repeal the tax on large employers that they passed just less than a month ago.
The background: The “head tax” — $275 per employee for companies with at least $20 million in gross annual revenue — was passed unanimously by the city council and would have raised about $47 million a year to combat homelessness and help with Seattle’s affordable housing crisis. It was scheduled to take effect in 2019 and would have affected nearly 600 businesses. The tax was set to expire after five years. The Seattle region has the third-highest number of homeless people in the U.S. The city spent $68 million on homelessness last year and plans to spend $78 million this year, according to the Associated Press.
What happened: Businesses fought back, warning that the tax would stunt job growth in the area and criticizing the city’s spending. "The city does not have a revenue problem – it has a spending efficiency problem,” an Amazon spokesman said. Opponents of the tax started a campaign to repeal it through a ballot referendum. The campaign — funded by Amazon, Starbucks and the Northwest Grocery Association, among others — reportedly has already collected more than twice the number of signatures required to put the tax on the November ballot. City officials were wary of losing that vote, or having the law struck down by state legislators even if it survived the ballot challenge.
“It is clear that the ordinance will lead to a prolonged, expensive political fight over the next five months that will do nothing to tackle our urgent housing and homelessness crisis. These challenges can only be addressed together as a city, and as importantly, as a state and a region,” Seattle Mayor Jenny Durkan and seven of nine city council members said in a statement Monday. “We heard you. This week, the City Council is moving forward with the consideration of legislation to repeal the current tax on large businesses to address the homelessness crisis.” The city council voted 7-2 Tuesday afternoon to repeal the tax.
Why it matters: “Tax experts say the reversal underscores the limited leverage that cities across the country have over corporations such as Amazon, which helped wage an intense public relations campaign to turn the public against the tax,” writes The Washington Post’s Jeff Stein. And, he adds on Twitter, the Seattle story is the latest of several examples that raise an important national question: “Even in 2nd Gilded Age, will anybody actually raise taxes on rich?” Vanity Fair’s Maya Kosoff says that Seattle’s quick reversal “reveals the long odds municipalities face when asking local corporations to help repair the social fissures they have left in their wake.” And Jezebel was even more pointed with its headline, targeting Amazon founder Jeff Bezos: “Richest Man Alive Still Winning War on Poor People.”