Seattle’s largest businesses such as Amazon.com Inc. and Starbucks Corp. will have to pay a new tax to help fund homeless services and affordable housing under a measure approved by city leaders.
The City Council unanimously passed a compromise plan Monday that requires businesses making at least $20 million in gross revenue to pay a tax of about $275 per full-time worker per year — lower than the $500 per worker initially proposed. The “head tax” would raise roughly $48 million a year to build affordable housing units and provide emergency homeless services.
The debate over who should pay to solve a housing crisis exacerbated by Seattle’s rapid economic growth comes after weeks of tense exchanges, raucous meetings and a threat by Amazon, the city’s largest employer, to stop construction planning on a 17-story building near its hometown headquarters.
Amazon, Starbucks and business groups sharply criticized the council’s decision after Monday’s vote. They called it a tax on jobs and questioned whether city officials were spending current resources effectively. One state Republican leader said he would seek legislation next year to make clear that a city tax on employees, wages or hours is illegal.
Seattle-based Starbucks had harsh words for its hometown leaders. It accused the city of spending without accountability while ignoring that hundreds of children sleep outside.
“If they cannot provide a warm meal and safe bed to a 5-year-old child, no one believes they will be able to make housing affordable or address opiate addiction,” Starbucks’ John Kelly said in a statement.
But worker and church groups and others cheered the tax as a step toward building badly needed affordable housing in an affluent city where the income gap continues to widen and lower-income workers are being priced out.
“People are dying on the doorsteps of prosperity. This is the richest city in the state and in a state that has the most regressive tax system in the country,” said council member Teresa Mosqueda, who wanted a larger tax but called the compromise plan “a down payment” to build housing the city needs.
For Seattle’s liberal City Council, the discussion Monday centered not so much on whether there should be a head tax but rather on how big it should be. Four bill sponsors initially pitched a tax of $500 per full-time employee per year, but a compromise proposal emerged over weekend after they couldn’t muster the six votes needed to override a potential veto by Mayor Jenny Durkan.
Council member Lisa Herbold, a bill sponsor, said that the revenue won’t be enough to fully address the problem given the city’s dire needs and human suffering, but the bill was “the strongest proposal” that could withstand the veto threat.
Proponents of the tax say too many people are suffering on the streets, and while city-funded programs found homes for 3,400 people last year, the problem deepens. The Seattle region had the third-highest number of homeless people in the United States and saw 169 homeless deaths last year. The city spent $68 million on programs for the homeless last year and plans to spend more this year. The tax will provide additional revenue.
“This legislation will help us address our homelessness crisis without jeopardizing critical jobs,” Durkan said in a statement.
Other cities have implemented similar taxes, but critics say Seattle’s tax could threaten the booming local economy and drive away jobs.
Nearly 600 large employers, roughly 3%, would pay the tax starting in 2019. Amazon — the city’s largest employer, with 45,000 workers — would take the biggest hit.
Amazon Vice President Drew Herdener said the company was disappointed.
While Amazon has resumed construction planning on the downtown building, he said in a statement Monday, “we remain apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here.”
He noted that city revenue has grown dramatically and said that the city “does not have a revenue problem — it has a spending efficiency problem.”
Council member Lorena Gonzalez shot back that she was “equally disappointed” in Amazon’s reaction to the council’s vote and said she thinks “their tone in this message that is clearly hostile toward the City Council is not what I expect from a business who continues to tell us that they want to be a partner on these issues.”
Before the vote, she said the city “has an obligation to take care of the people who are surviving and suffering on our city streets.”
Shannon Brown, 55, who has been living in a tiny home at a south Seattle homeless encampment, said there’s simply not enough housing for the city’s poorest people.
“I live in a little shed, but it’s better than living in a tent or in a sleeping bag on the street,” she said. “There’s no way I can afford to live in Seattle. I don’t understand why businesses think it’s wrong to help.”
John Boufford with the International Union of Painters and Allied Trades said he didn’t understand the rhetoric against Amazon, which he noted provides good jobs for thousands of people.
“They’re driving this economic engine,” he said. “I’m confused about why the city of Seattle is fostering an adversarial relationship with businesses in this city.”