May 14, 2018

Steve Leigh reports on Amazon's attempt to block a head tax on Seattle's richest businesses to help pay for affordable housing--and the response of activists.

TO CITIES wooing Amazon's second headquarters: Beware of what you wish for.

With $1.6 billion in profit in the first quarter of 2018, this still isn't enough for CEO Jeff Bezos. Now Amazon is blackmailing the city of Seattle.

Four members of the City Council recently proposed a modest "head tax" of $500 per year on each employee of the 3 percent top businesses--those that make over $20 million a year--in Seattle. This would provide $75 million for homeless services and "deeply affordable" housing.

Amazon could pay its share of the tax--$20 million--for the next 80 years just out of its first quarter 2018 profit, and Bezos could personally pay it for 650 years out of his net worth of $130 billion.

But instead of supporting this modest levy, Amazon suspended construction on two buildings in downtown Seattle, jeopardizing 7,000 construction jobs, to defeat the tax. As of May 12, Bezos worked out a deal with Mayor Jennie Durkan to cut the tax in half and reportedly planned to re-start construction.

Protesters gather in Seattle in support of a plan to tax the city's biggest corporatiosn (Rick Barry)

A final City Council vote on the $75 million tax or the mayor's substitute will come soon. This is a classic case of big business using its economic power to control politics and attack the needs of ordinary people.

AMAZON IS the biggest private employer in the city with 45,000 employees, but other businesses have joined the campaign against the tax.

The Downtown Seattle Association has testified against the proposal, claiming that businesses would flee the city if they have to pay this tax. Even businesses too small to pay the tax have lined up against it, asserting that their business would decline if bigger businesses move out.

Businesses made the same claim in opposing Seattle's $15-per-hour minimum wage. In response to the minimum wage increase, a mandate to pay sick leave and other regulations, Fox News has named Seattle a "socialist hellhole."

Yet Seattle is a capitalist boomtown, with construction cranes everywhere and new residents moving in every day. Seattle is certainly not a hellhole for the capitalists. And it certainly isn't socialist for the workers and the poor.

In fact, Seattle is one of the most unequal cities in the country. Some 13 percent of Seattle's households, nearly 100,000 people, make less than $30,000 per year while 15 percent make over six times as much--more than $200,000.

AS IN other U.S. cities, homelessness is a severe problem in Seattle. Nearly 1 percent of Seattle's population is without regular housing. The yearly "One Night Count" in January 2017--in which the Seattle/King County Coalition on Homelessness tallied the number of homeless in the city--found 3,857 people sleeping outside in the city.

When you take into account people in in shelters and other temporary housing, the 2018 One Night Count found over 11,000 homeless people in the county as a whole, with half of those in Seattle. The city declared its own official Homelessness State of Emergency in 2015, though homelessness has only risen since then.

Many city policies actually hurt the homeless. The police "sweep" homeless camps, sending residents to the wind often after confiscating their belongings. They ticket car campers and arrest people sitting on the sidewalk. So far this year alone, 42 homeless people have died on the streets of Seattle, according to Women In Black.

An independent study of homelessness commissioned by the Chamber of Commerce concluded that the county would need to spend $400 million per year to solve the homelessness crisis. "Seattle and King County could make the homelessness services system run like a fined-tuned machine," the report issued in May concluded, "but without dramatically increasing the region's supply of affordable housing options, solving the region's homelessness crisis is all but impossible."

The Chamber hasn't yet been able to explain why its own study contradicts its position against the tax.

One of the chief causes of homelessness is high rent. Average rent in Seattle in April was over $2,000 a month with one-bedroom apartments going for $1,98. This is a 57 percent increase since 2011.

Yet wages, especially for lower-wage workers, haven't gone up nearly this much. Higher rents and continued low wages are pushing people out of Seattle. This in turn is aggravating the transportation crisis with more people having to commute longer distances to get to work in Seattle.

This is especially hard on people of color who make up a disproportionate number of the poor and homeless. The gentrification of Seattle, like San Francisco, has also resulted in a declining percentage of people of color in the city.

LAST FALL, more than a dozen organizations, including the Transit Riders Union and the Real Change Homeless Empowerment Project, joined together to form the Housing for All--Stop the Sweeps Campaign.

When the Progressive Revenue Task Force developed a proposal for the head tax, this coalition and others began organizing in favor for the tax, with hundreds of people turning out to City Council hearings and holding rallies.

The campaign has focused on Amazon, but isn't letting other businesses off the hook. On May 11, hundreds occupied the council chambers and almost unanimously supported the tax. Many called for doubling it to provide $150 million a year. Between speakers, participants chanted "75, 75, keep our homeless neighbors alive!"

Amazon's bullying has produced unfortunate response from some unions. Union sheet metal workers along with some other construction trades have lined up in support of Amazon's opposition to the tax.

Instead of confronting Amazon's attack on their jobs, they've blamed the advocates of low-income housing, which is ironic since the new low-income housing that the tax would provide requires thousands of construction jobs as well.

At some hearings, construction workers have carried signs reading, "Stop the War on the Workers" even though a majority of the homeless are themselves workers. They are accepting the narrowest interpretation of their craft interests instead of supporting the interests of workers as a whole.

A union speaker on May 11 said that Seattle needs a "good business climate" to keep construction jobs going. The truth is that accepting the goal of a "good business climate" would logically mean no unions, no social programs and no taxes. It would be a race to the bottom with nothing to catch workers when they fall.

THANKFULLY, THE labor movement as a whole has rejected this support of business interests.

The Martin Luther King Jr. County Labor Council, representing the majority of unions in the area, issued a statement in support of the head tax, reading in part, "This is a moral imperative: Seattle is the third-ranked city for number of citizens experiencing homelessness in the country..."We need housing" and to "address the underlying causes of the crisis."

Amazon is non-union, and even among its workers, opinion about the head tax is mixed. As one high-tech Amazon worker put it:

I have overheard a lot of people discussing how, "If we add this tax, then we will have to find places to cut like employee childcare"...People have this conception that Amazon's profit margins are so low, that any added costs need to be taken away from somewhere else (by the way, this is the same logic our two political parties use of "balancing the budget" to reduce welfare and then coincidentally a few years later cut taxes). There are plenty of places this can come from; it is true that Amazon's profits are booked at pretty low values, but this is precisely because they have a high rate of reinvestment (so they can take over the world). Therefore, corporate people will argue that there isn't a very big pool to pay this tax from (similarly, that there isn't a big pool to pay for childcare); that said, Amazon's profit last year was $3 billion, so...$20 million is chump change.

The economic power of Amazon is therefore not captured by these profit measures, but rather by their market capitalization--a market cap of $750 billion for profits of $2 billion per year--but again this is due to their high reinvestment strategy (rather than dividends).

They can easily take out a billion per year with out too dramatic an impact--most of which would be felt as an engineer hiring freeze corresponding to a reduction on reinvestment in technology combined with a reduction in the value of Amazon stock. (i.e. acting as a wealth tax on Jeff Bezos and other shareholders).

Focusing on profit and saying Amazon has a low profit margin misses the point. The perceived value of Amazon (and the implied real wealth of its' shareholders) comes not based on the return offered in dividends as implied by the profit, but rather as a speculation of Amazon's economic power.

Another Amazon worker said:

It's corporate blackmail plain and simple--although not very effective in my opinion. We have a major affordability crisis driven by Amazon bringing lots of high-paying jobs into the city and their response to taxes to start to alleviate the situation is to say we won't bring as many high-paying jobs into the city? Great! Seems like a win-win: We get the head tax and fewer high-paying Amazon jobs, slowing the affordability crisis. Seattle's primary challenges are inequality, affordability and taxing the rich, not needing more high-paying tech jobs. The idea that Amazon is going to move the existing 50,000 jobs out of the city, or even a significant portion of them, is just silly--as I look out my office window at all the construction and investment Amazon is making and has already made in expansion and office space here. $20 million is pennies compared to the billions in sunk costs they already have here.

The struggle for the tax is continuing right up to the first full City Council vote on the measure on May 14. Activists are mobilizing to fill the City Council chamber in support of the head tax.

On May 12 , hundreds marched from Seattle Central College to Amazon headquarters in downtown Seattle to call for the city council to reject the mayor's deal with Jeff Bezos and demanded the full $75 million for housing and homeless services.