The Seattle tech community is following Amazon’s lead, publicly pressing the City Council to drop a proposed tax on top-earning companies to fund affordable housing and homeless services. On Tuesday afternoon, 130 startup founders, CEOs, venture capitalists, and other business leaders issued an open letter to Mayor Jenny Durkan and the City Council opposing the so-called “head tax” and warning about its potential consequences.

“Instead of a strategic plan to address growth, the Council has proposed to tax only 3% of our city’s largest business, charging them a flat rate per worker they hire, making businesses pay a price for creating jobs,” the letter says. “This is like telling a classroom that the students who do the most homework will be singled out for detention.”

Tech leaders who signed the letter include Expedia CEO Mark Okerstrom, Madrona Venture Group Director Matt McIlwain, F5 CEO François Locoh-Donou, Flying Fish Partners co-founder Heather Redman, and OfferUp CEO Nick Huzar. (Scroll down for the full list.)

The proposal would levy a tax of about $500 per employee, per year, on companies with more than $20 million in revenue.

“We oppose this approach, because of the message it sends to every business: if you are investing in growth, if you create too many jobs in Seattle, you will be punished,” the letter reads. “Sending this message to entrepreneurs, investors, and job creators will cause far greater damage to Seattle’s growth prospects than the direct impact on the businesses being taxed. Not all of the undersigned are directly impacted by this tax, yet we all agree it is a bad idea.”

The head tax has become a lightning rod in Seattle, igniting furious debate and angry clashes that call into question whether the “Seattle nice” stereotype still holds in this period of unprecedented growth.

The controversial proposal reached a boiling point last week when Amazon paused construction on a new skyscraper downtown and said it was reconsidering whether or not it will occupy the massive Rainier Square office complex or sub-lease it out to another company, pending the city’s decision. Seattle City Councilmember Kshama Sawant held a press conference at Amazon’s Seattle headquarters urging her colleagues not to back down but her entreaty was drowned out by dozens of iron workers, who work on construction projects for Amazon, shouting, “no head tax.”

The City Council estimates that the head tax would generate about $75 million per year, with approximately $57 million dedicated to building affordable housing. The remaining funds would go toward services for people experiencing homelessness. Seattle’s largest private employer, Amazon, would be on the hook for about $20 million per year under the tax, starting in 2019. In 2021, the head tax would be phased out and replaced with a payroll tax of 0.7 percent.

This is like telling a classroom that the students who do the most homework will be singled out for detention.

Although the list of signatories is long, others in the Seattle tech industry support the head tax. Seattle Tech 4 Housing founder Ethan Phelps-Goodman connects tech workers with volunteer and advocacy opportunities to fight homelessness and displacement. He believes the loudest voices in the debate are creating a false narrative that the tech industry, as a whole, is against the head tax.

“That’s certainly not true in the grassroots that I see,” he said in an interview with GeekWire last week.

Phelps-Goodman said he believes the Seattle tech industry could actually benefit competitively if the head tax were to pass.

“The competitive advantage that Seattle has, as an industry, is primarily in our relatively affordable housing,” he said. “We don’t have more workers here or more educated workers than they have in the Bay Area. We certainly don’t have more venture capital than in the Bay Area. There’s more of everything that you would build businesses around in the Bay Area except that you can’t afford to live there.”

Seattle has been in an official state of emergency over its homelessness crisis since 2015. The city has the third-largest homeless population in the country, behind New York and Los Angeles, according to Zillow data. The roots of Seattle’s disproportionately high homelessness population are almost as controversial as the head tax itself but the crisis is typically attributed to rapid growth and zoning that restricts where multi-family housing can be built.

Seattle is one of the fastest growing cities in the country, driven largely by the booming tech industry. Despite all of those newcomers, 69 percent of residential land plots are occupied by single-family homes, according to The Seattle Times. Seattle home prices have grown more rapidly than any other city for the past 17 months in a row and the phenomenon doesn’t show signs of slowing. The Puget Sound Regional Council estimates the region will add 1.2 million jobs and 1.8 million people by 2050.

The Seattle City Council estimates that it could build 1,780 “deeply affordable” housing units over the next five years if the head tax passes. The city says the funds would also go toward removing 100,000 pounds of garbage from the streets each year and maintaining an additional 362 shelter beds per year.

“I get when people say it’s a tax on jobs and anything you tax is unfortunate,” Phelps-Goodman said. “The question is, can you get your money’s worth from that tax? Can you get a societal benefit that’s worth whatever the costs of that tax are? So when you’re, in this case, pairing about a doubling of the production of deeply affordable supportive housing against the $20 million a year for Amazon and $75 million total, it just seems so obviously worth the effort.”

Jeff Reifman, a Microsoft alum and founder of MeetingPlanner.io, wrote in an op/ed today, “This is what Amazon does, it plays communities against each other. … Frankly, I can’t think of anything better for Seattle right now than moderating our growth and allowing time for our region to catch up with the services and infrastructure needed to address this past decade’s expansion.”

A study commissioned by the Seattle Metropolitan Chamber of Commerce — which has actively campaigned against the tax — suggests that it may have unintended consequences for Seattleites on the verge of homelessness. According to the analysis, job growth for low-wage earners could slow because they “would become relatively more expensive to employers than high-wage jobs.” The study was conducted by the consultancy firm ECONorthwest and paid for by the Chamber.

The signatories of the open letter sent Tuesday are calling for a “prioritized spending plan” to address Seattle’s homeless crisis, a mix of taxes to fund the plan, and rezoning of single-family neighborhoods as alternatives to the head tax.

“We will gladly help convene our city’s business leaders, labor leaders, and Council members, to collectively design a plan that works for all groups,” the letter says.

Not all of the companies represented on the list of signatories would be directly impacted by the tax but they are unified in opposition to it. Representatives from many of those companies plan to attend a public hearing on the tax at 9:30 a.m. in Seattle Wednesday.

Continue reading for the full letter and list of signatories.

To the citizens and Councilmembers of the City of Seattle, As CEOs, leaders, and investors in our region’s growing economy, from businesses small and large, the undersigned are opposed to the Seattle City Council’s proposed “head tax.” We all care deeply about the issues facing the city, and many of us already play an active role in helping. We oppose this tax and recommend an alternate approach. Seattle is among the fastest growing cities in the U.S., thanks to our culture of innovation and collaboration, our welcoming approach to newcomers, and our profound natural beauty. We all proudly appreciate the benefits of this growth including a 3.1% unemployment rate which is well below Seattle’s 5.4% long term average. We also recognize its challenges. Our city’s infrastructure and public services must expand to support a growing population that expanded by 64,000 in 2016, and rising housing costs and homelessness affect our entire community. These problems won’t solve themselves. It will take collaboration and dialogue to come up with innovative solutions to maintain a thriving economy in our wonderful city. The City Council’s proposal for a “head tax” is not a solution. Instead of a strategic plan to address growth, the Council has proposed to tax only 3% of our city’s largest business, charging them a flat rate per worker they hire, making businesses pay a price for creating jobs. This is like telling a classroom that the students who do the most homework will be singled out for detention. We oppose this approach, because of the message it sends to every business: if you are investing in growth, if you create too many jobs in Seattle, you will be punished. Sending this message to entrepreneurs, investors, and job creators will cause far greater damage to Seattle’s growth prospects than the direct impact on the businesses being taxed. Not all of the undersigned are directly impacted by this tax, yet we all agree it is a bad idea. A proper approach would combine evaluating the need for additional expenditures beyond the city’s 17.4% increase the past 3 years, tax revenue increases based on an optimal mix of taxes, a prioritized spending plan to address both housing and infrastructure, as well as new zoning and related policies to reduce the costs of housing and construction. We are all aware of the challenges our city faces. As leaders in Seattle’s business community, it is our shared responsibility to offer solutions, not just criticism. We ask the City Council to set aside the misguided “head tax,” and to engage us in more dialogue. We will gladly help convene our city’s business leaders, labor leaders, and Council members, to collectively design a plan that works for all groups. We can also learn from how other cities have succeeded or failed to manage similar growth. We are not the first city to cope with hyper-growth; let’s learn from the best ideas of those before us. Our city is stronger when we work together to find solutions that meet everybody’s needs. Let’s join forces to make a plan that sustains the growth our city is proud of, while also addressing the problems of housing, homelessness and infrastructure. That is what great cities do – let’s show our community and the world what Seattle can do together! Signed,

Aaron Bird

Bizible

Founder & CEO Aaron Easterly

Rover.com

CEO Adam Selipsky

Tableau

CEO Adam Wray

AstrumU

CEO Andy Dale

Montlake Capital

Managing Partner Andy Liu

Unlock Venture Partners

Partner Andy Sack

Founders Co-op

Co-founder Arif Kareem

Extrahop

CEO Barry Crist

Chef Software

CEO Ben Slivka

Dreambox

Founder Bill Owens

Red Bison LLC

Co-founder Bill Richter

Qumulo

CEO Bob Kelly

Ignition Partners

Managing Partner Bob Nelsen

Arch Venture Partners

Managing Director Bob Ratliffe

Silver Creek Capital

President Brad C Kleinfelder

Plateau Software, Inc.

Founder Brad Jackson

Slalom Consulting

CEO Brad Silverberg

Fuel Capital

Co-founder Brad Tilden

Alaska Airlines

CEO Brent Frei

Smartsheet & TerraClear

Founder Bryan Trussel

Glympse

Founder & Chairman Chad Robins

Adaptive Biotechnologies

Founder & CEO Chia Chin Lee

BigBox VR, Inc.

CEO Chris Ackerley

Ackerley Partners

Partner Chris DeVore

Founders’ Co-op

Managing Partner Chris Jostol

Mechanical Sales, Inc.

President Christopher Young

ChefSteps

Co-founder & CEO Clayton Lewis

Arivale

CEO Dan Lewis

Convoy

CEO Dan Sheeran

Healthslate

CEO Dan Todd

Influence Mobile

CEO Daryn Nakhuda

Mighty AI

CEO Dave Cotter

MessageYes

CEO Dave Parker

DKParker, LLC

Managing Partner David Naffziger

BrandVerity, Inc.

CEO Dawn LePore

Drugstore.com

Former CEO Dhiren Fonseca

Centares

Partner Doug Ray

HarborTech Mobility Inc

Founder & President Doug Sackville

Commercial Office Interiors

President Dylan Dias

Neal Analytics

CEO & Managing Consultant Ed Lazowska

University of Washington CSE

Bill & Melinda Gates Chair Eric Anderson

Planetary Holdings

Chairman Ethan Caldwell

Marchex

Co-founder François Locoh-Donou

F5 Networks

CEO Galen Smith

Redbox

CEO Grant Canary

DroneSeed

CEO Grant Ries

LiveRamp B2B

CEO Greg Gottesman

Pioneer Square Labs

Co-Founder Hadi Partovi

Code.org

Founder & CEO Hans Bjordahl

Culture Foundry

CEO Heather Redman

Flying Fish Partners

Co-Founder & Managing Director J Scott Codespoti

Paradoxes, Inc.

Founder & CEO Jason LaBaw

Bonsai Media Group

CEO Jason Leekeenan

TraceMe

CEO Jay Reitz

Axon

Seattle Office Lead Jeff Hussey

Tempered Networks, Inc.

CEO Jeff Malek

Code Fellows

CEO Jesse Proudman

Strix Leviathan

CEO Jim Gaherity

Coinstar

CEO Jim O’Brien

O’Brien Business GRP

CEO Joe Heitzeberg

CrowdCow

CEO John Connors

Ignition Partners

Managing Partner John Gabbert

Pitchbook

CEO John Maffei

Matcherino

CEO John Stanton

Trilogy Partners

Founder Jon Matsuo

Koverse

CEO Jon Roskill

Acumatica

CEO Jonathan Sposato

PicMonkey

Founder & Chairman Kendall Kunz

Forms On Fire, Inc.

Founder & CEO Kevin Gemeroy

Dynamic Computing

CEO Kiran Bhageshpur

Igenous

CEO Kirby Winfield

Ascend.vc

Managing Member Kristen Hamilton

Koru

Co-founder & CEO Kurt Shintaffer

Apptio

CFO Lauren Neiswender

Blue Nile

General Counsel Manny Medina

Outreach

CEO Mark Britton

Avvo

Founder & CEO Mark Hadland

Level 11

CEO Mark Liffmann

Omnidian, Inc.

CEO Mark Okerstrom

Expedia

CEO Mark W. Meyer

CodeSmart, Inc.

President Mary Snyder

Seattle Luxury Homes

Founding Partner Matt McIlwain

Madrona Venture Group

Managing DIrector Michael Schutzler

WTIA

CEO Mike Howell

Dolly

CEO Mike Metzger

Payscale

CEO Nancy Heen

Axelerate, LLC

CEO Nick Huzar

OfferUp

CEO Nikesh Parekh

Suplari

CEO & Co-Founder Oren Etzioni

Allen Institute for AI

CEO Paula Reynolds

Prefer West

CEO Peder Schmitz

Columbia Pacific Wealth Management

Co-founder Penny Milliken

HeR Interactive

CEO Pete Christothoulou

Inspo Network

Co-founder & CEO Peter Hamilton

TUNE

CEO Peter Neupert

Adaptive Biotech, Fred Hutch, LabCorp

Board Director Rahul Sood

Unikrn

CEO Raj Singh

Accolade

CEO Raja Narayana

Aditi

CEO Rob Eleveld

Whitepages, Inc.

CEO Rob Glaser

RealNetworks

Chairman & CEO Rob Lilleness

SmartLabs

CEO Robbie Cape

98point6

Co-founder & CEO Robert Lehr

Evergreen ID Systems

President Robert Nelsen

Arch Venture Partners

Managing Director Rudy Gadre

Founders Co-op

General Partner Sean Muller

iSpot.tv

CEO Sethu Kalavakur

Tavour

CEO Shauna Swerland Youssefnia

Fuel Talent

CEO Sheila Gulatti

Tola Capital

Managing Director Spyro Kourtis

The Hacker Group

CEO Sridhar Chandrashekar

Optio3, Inc.

Co-founder & CEO Srikant Vemparala

9Logic Technologies

President Stead Burwell

Swisslog Healthcare

EVP Steinar Sande

Raima Incorporated

CEO Steve Banfield

ReachNow

CEO Steve Murch

BigOven

CEO Steve Shivers

Doxo

CEO Steve Singh

Docker

Chairman & CEO Sujal Patel

Isilon Systems & Ignite Bio

Founder & CEO Sunny Gupta

Apptio

CEO Ted Ackerley

Ackerley Partners

Managing Partner Terry Drayton

Livible

Founder & CEO Thomas Gobeille

NCA

President & CEO Thor Culverhouse

Skytap

CEO Tim Sooter

Legal+Plus Software Group, Inc.

CEO Todd Hooper

Vreal, Inc.

Founder & CEO Todd Owens

Azuqua

CEO Tom Alberg

Madrona Venture Group

Managing Director Tom Seery

RealSelf

Founder & CEO Tom Taft

Laurel Group

Managing Partner

(Editor’s note: Jonathan Sposato is GeekWire’s chairman).