A Jolt of Java May Help Fund Seattle Child Care

SEATTLE —  The idea came at the end of a long, frustrating brown-bag session at a public-policy think tank here.

The challenge was to save the city’s child-care programs. Staring into his empty coffee cup, the meeting coordinator’s mind landed on an unlikely solution: Put a tax--just a “benign” dime a shot--on espresso.

That led to a petition signed by more than 20,000 Seattle residents, and next year, voters will decide whether the tax becomes law, one that taps right into Seattle’s legendary addiction to coffee.

This is, after all, the town where Starbucks was born and where the $12 pound of beans became a staple. There is one Starbucks for every 7,000 residents in Seattle, compared to one per 64,000 in New York. Seattle also has two other major coffee chains, Tully’s Coffee and Seattle’s Best Coffee, as well as countless cafes and espresso carts.

A recent poll showed that 74% of Seattle residents would vote for the tax. “For people outside of Seattle who don’t understand the consumption of espresso, [the tax proposal] can be seen as crazy,” said John Burbank, the think tank’s executive director, “but it was common sense.”

Research by his nonprofit Economic Opportunity Institute showed that people preferred a tax on liquor or beer over one on espresso. But because of the large number of lattes and cappuccinos sold, a tax on espresso could be lower than one levied on alcohol.

Burbank estimates the tax could generate $7 million to $10 million a year. City Council aides dispute his figures, saying their research shows the tax would bring in $1.5 million to $3 million a year.

Burbank’s institute is funded by foundations and labor unions. The think tank’s mission is to promote public policy in the interests of low-income people, and it has long championed child-care issues.

Burbank says the tax would restore cuts to the child-care programs made earlier this year by Gov. Gary Locke. He also says it would provide more low-income families with subsidies for child care, improve preschool programs and increase teacher salaries.

At Bauhaus Books & Coffee, the sidewalk is dotted with tables of customers for whom coffee is a half-day activity, not just a drink.

Espresso lovers like Chris Altman, who at a dime a day would spend an extra $36.50 a year, said the investment is worth it. “I’m OK with it,” said the 35-year-old, stirring his iced latte. “The money’s got to come from somewhere.”

Hope Revuelto, 25, was cooling her regular coffee ($1 because she brought her own mug) and reading “Zen and the Art of Pottery.” She supports the initiative and said its critics are behaving as would be expected of espresso drinkers: They want the most expensive thing on the menu but resist paying 10 cents to help the needy.

Some say the tax isn’t the issue; they just resent being singled out.

David Marsh, 45, a costume manager, drinks up to three espressos a day, which means he’d be shelling out an extra $109.50 a year. “I, for one, don’t have kids, but I drink espresso,” he said, as he sewed a leather collar onto a chain-mail tunic. “I don’t mind paying, but I think everyone should pay.”

Coffeehouses are steamed about it, and they’ve organized as JOLT--Joined to Oppose the Latte Tax. Among the members are Seattle’s Chamber of Commerce and the city’s two largest coffee franchises, Starbucks and Tully’s.

The tax would force coffeehouses to track sales of any beverage that contains espresso, a task that could be an administrative nightmare for smaller cafes, especially during the frantic morning rush. If espresso counts come under suspicion, coffeehouse owners could face a city audit.

University of Chicago economics professor Michael Greenstone said the tax doesn’t add up.

“The purpose of any tax is to be efficient and equitable, and this is neither,” he said. “On the efficiency side, it’s surely going to lead to costly efforts by both businesses and consumers to find ways to avoid the tax. For example, Starbucks could claim that they are using finely ground coffee, [instead of coffee run though an espresso maker] and that consequently, they are exempt from the tax. Would they be right? I don’t know, but finding out will surely take lots of legal fees that could have gone to child care.

“Of course, from a public-relations perspective, this is an ingenious idea, and I mean that in a cynical way. They’ve pitted espresso drinkers against child-care supporters, and who’s going to side with the espresso drinkers?”

In fact, the proposed tax has forced opponents into a political two-step, where their criticism must remain a beat behind their public stance of political correctness. In a liberal city like Seattle, corporations continually advertise their commitment to social activism, and throughout the debate over the initiative, JOLT members prefaced their opposition with endorsements of good child care.

“Starbucks will continue to support early-learning and childhood-development programs through the millions of dollars we contribute annually,” the company said. “However, Starbucks does not understand why the Economic Opportunity Institute would recommend an additional consumer tax on espresso beverages, or any other single consumer product.”

The City Council has yet to decide when the initiative will go before voters next year. The initiative’s authors say it is directed at vendors; critics predict it will be passed on to consumers through higher prices, effectively punishing them for their choice of coffee. The tax would be applied to any drink with at least half an ounce of espresso, including decaf. Drip coffee would be exempt.

Burbank says the tax would reach only a pre-selected group of consumers who are wealthier than those who drink drip. So, he’s been pitching it as a modern-day Robin Hood tax, where the needy get a dime every time the affluent spend $3 to $4 on an espresso.

It’s the kind of political marketing that Fran Beulah, 43, finds funny. “I drink espresso,” she said, laughing, “and I am not rich.”