Seattle city leaders yield to Amazon and other companies on a proposed tax.
Seattle officials scuttled a corporate tax on Tuesday that they had wholeheartedly endorsed just a month ago. The vote delivered a big win for Amazon and offered a warning to cities eagerly bidding for the retailer’s second headquarters: This is a corporation that will go to the limit to get its way.
The tax would have raised about $50 million a year to help the homeless and fund affordable housing projects.
As Seattle has boomed over the past decade, in large part because of Amazon, rents have soared and some residents have suffered. The city’s homeless population is the third largest in the country, after New York and Los Angeles, estimated at 12,000.
Taxing successful companies to help alleviate some of the problems that their success caused was such a compelling idea that it was quickly taken up in Silicon Valley itself.
California cities like Cupertino, East Palo Alto, Mountain View and San Francisco have recently explored various measures.
But in Seattle, the notion has proved extraordinarily contentious.
The Seattle City Council repealed the tax in a 7-to-2 vote on Tuesday that was accompanied by acrimony and accusations. A divided crowd chanted, jeered and booed at the council meeting, drowning out the leaders as they cast their vote.
Less than a month ago, the tax had passed unanimously. What changed in those weeks was a realization that corporate interests — not only Amazon but Starbucks, the Microsoft cofounder Paul Allen’s investment firm Vulcan and local food and grocery companies — would continue to fight against it, and that at least some residents agreed with the companies.
The opponents funded No Tax on Jobs, an effort aimed at getting enough signatures to put a repeal on the November ballot. It became clear over the weekend that the measure would succeed in coming before voters, leading Jenny Durkan, Seattle’s mayor, and seven council members to issue a statement saying, “We heard you.”
Several council members lamented the about-face even as they backed repealing the tax.
“I am deeply troubled and disappointed by the political tactics utilized by a powerful faction of corporations that seem to prioritize corporations over people,” Councilwoman Lorena Gonzalez said Monday.
Amazon called the vote “the right decision for the region's economic prosperity.”
The company is “deeply committed to being part of the solution to end homelessness in Seattle,” Drew Herdener, an Amazon vice president, said in a statement.
Jeff Shulman, an associate professor in the University of Washington's Foster School of Business, said the way the tax got pushed through is the antithesis of the collaborative spirit the city is known for.
“It kind of set up larger businesses as the enemy, and in reality, the city is going to need them as allies and partners,” he said.