The tax, which would have assessed $275 per employee on Amazon, was not considered a ‘winnable battle’ by officials

This article is more than 2 years old

This article is more than 2 years old

A month after Seattle leaders applauded themselves for landing a small blow against big business in the form of an “Amazon tax”, on Tuesday they hurriedly abandoned it to avoid what they called “a prolonged, expensive political fight”.

The tax, which would have assessed a $275-per-employee “head tax” on Seattle’s largest private employer, was slated to pay for new public housing and homeless services in the booming city. Passed unanimously on 14 May, the tax was also an unsubtle demonstration of the company town’s disaffection with its unofficial patron, Seattle-headquartered Amazon.

A month of pressure from business interests broke city leaders. Seven of the city council’s nine members voted to repeal the ordinance, cutting short opponents’ efforts to put the tax up for a public vote.

Opposition to Seattle's 'Amazon tax' unites labor and big tech Read more

“This is not a winnable battle at this time,” councilmember Lisa Herbold said before voting for the repeal. “There is so much more to lose between now and November.”

An Amazon spokesman, Drew Herdener, called the council vote “the right decision for the region’s economic prosperity”.



“We are deeply committed to being part of the solution to end homelessness in Seattle,” continued Herdener, who went on to highlight Amazon’s support for charities involved in the issue.

In recent years, Seattle has seen incomes and population climb, and housing costs rise, as Amazon and its downtown campus exploded. Aubrey Pullman, an Amazon employee, said he supported the tax even if it cost the city Amazon.

“I want all kinds of people in the city, not just rich people,” Pullman said. “And if it means that I have to get a different job because Amazon moves, I will take that.”

In Washington, a state with no income tax and ample restrictions on local taxing authorities, cities struggle for a cut of a roaring economy. Councilmember Teresa Mosqueda, an architect of the head tax who voted against its repeal, described the head tax as one of the few options in the city toolkit.

“It’s easy to say no, it’s harder to say yes to a solution,” Mosqueda said.

The solution endorsed in May by the city council – after ample dickering over the dollar figure – would have raised $48m annually through a tax on the large businesses. Mayor Jenny Durkan signed off on the tax, which she described at the time as a compromise that would “address our homelessness crisis without jeopardizing critical jobs”.

Nearly half of the Seattle’s renters are overburdened even as household incomes jumped 27% from 2012 to 2016, according to the US Census Bureau. The city’s forests, roadsides and sidewalks are increasingly packed with tents and shacks as the region’s population of unsheltered has grown to an estimated 12,500 people.

Mosqueda argued that other funding be secured for housing programs before any repeal.

“We need funding desperately to house the homeless,” Mosqueda said. “We need funding to shelter the unsheltered.”

Seattle lawmakers appeared poised to again lead the way for other left-leaning cities; Seattle in 2015 was the first large American city to institute a $15- an-hour minimum wage. Leaders in San Francisco and several Silicon Valley cities have taken steps toward taxing tech giants reshaping their communities.

Organizers in San Francisco expect to put a measure on the November ballot that would deliver $300m annually to house, shelter and assist homeless residents. Sam Lew, policy director for the city’s Coalition on Homelessness, said the measure amounts to a 0.5% tax on receipts from businesses grossing more than $50m.

“In the face of the enormous 14% Trump tax break for large corporations, we hope to recapture just 0.5% of that tax on the local level,” Lew said Tuesday.

A head tax will be on the November ballot in Mountain View, California, home to Google. Mountain View’s mayor, Lenny Siegel, described a situation similar to the one facing Seattle – rapid tech growth driving up housing costs and overwhelming community infrastructure – with a key distinction.

“We have a positive continuing relationship with Google and other tech businesses,” Siegel said on Tuesday, noting that Mountain View’s tax on Google would amount to about $143 per employee.

“A small tax – a fraction of a percent of payroll – is a good way to invest in transportation infrastructure, pay for local transit, and build housing,” he continued.

In Seattle, the tax found plenty of critics. The city’s self-styled, unabashedly vocal “silent majority” decried the tax as a drag on Seattle’s economy, while socialist activists demanded double the tax rate approved by the council. They marched from the May meeting chanting: “We’ll be back for more!”