Amazon, Seattle at odds over new tax

Seattle’s latest tax proposal to combat homelessness takes aim at large firms such as Amazon that have helped drive the city’s economic boom.

But the measure has sparked intense debate — even shouting matches in otherwise reserved Seattle — over who should pay to solve the housing crisis exacerbated by that growth.

City council is proposing a tax on employee hours to raise about US$75 million a year for affordable housing and homelessness services. Nearly 600 large employers making at least US$20 million in gross revenues would pay about US$500 a year per worker.

Amazon.com Inc., the city’s largest employer, would take the biggest hit.

Supporters insist the online retailer and others that have benefited from Seattle’s prosperity and contributed to growing income inequality and skyrocketing rents can and should pay.

Businesses and others say the so-called head tax is misguided and potentially harmful. They question whether the city is effectively using the tens of millions of dollars it already spends on homelessness each year.

Amazon raised the stakes last week when it halted construction planning on a 17- storey tower as it a waits a tax vote. It is also rethinking filling office space in another leased building.

The company has more than 45,000 workers, meaning it would pay more than US$20 million a year under the tax. It would likely owe even more when the tax switches to a 0.7-per-cent tax on business payroll in 2021.

Coun. Kshama Sawant, a socialist, said affordable housing is critically important and the council should “stand up to Amazon and Jeff Bezos’ bullying.” Construction workers chanted “no head tax” and disrupted a news conference she held last week on Amazon’s campus.

Seattle mayor Jenny Durkan hasn’t taken a position on the tax but said she’ll work to find common ground.

The proposal’s four sponsors said in a statement that the tax doesn’t target one company, though they noted Amazon’s record profits.

“It seems only fair that as so many struggle to make their way through a tax system that’s rigged in favour of large corporations, that we ask those same corporations to financially contribute to the public health and housing solutions designed to address those consequences,” they wrote.

Amazon’s threat to pause its expansion in Seattle comes as 20 cities vie to lure the company’s second headquarters and as it expands its workforce in Boston and Vancouver. Some see it as a warning to those contenders.

But Jeff Shulman, an associate professor at University of Washington, said he thinks Amazon is more focused on the long term.

“The city is looking at how much Amazon makes and comparing whatever tax to that number, and that could be a scary thought to Amazon,” he said.