A cautionary tale for Invest in Ed
Supporters of public education are fanning the flames of class warfare in Arizona with a ballot initiative that would tax the wealthiest here to pay for public schools.
As they do, they would be wise to heed a cautionary tale from the Pacific Northwest, where another tax-the-rich scheme crashed spectacularly in one of America’s most-progressive cities — Seattle.
The so-called “Amazon tax” was different by dimensions from this state’s Invest in Education Act. The Seattle proposal would have taxed the wealthiest businesses in that city to raise $75 million to solve a homelessness crisis.
In Arizona, the Invest in Education Act, promoted by advocates of public schools, would tax wealthy individuals to bring in $690 million in new funding for education.
Back in May, the Seattle City Council was moving full bore to impose a socalled “head tax” of $500 per employee on the city’s largest corporations.
However, the main target was Amazon — the tech giant that many Seattle residents blame for the city’s homelessness crisis caused by rising property values that pushed out low-income housing.
Seattle City Councilman Mike O’Brien, quoted in the New York Times, summed up this point of view: “We have a crisis in our town around housing affordability and homelessness. They’re closely related and it’s related to the booming tech industry in Seattle.”
The entire nine-member council was initially on board. And perhaps no one thought Amazon would blink, given its share of the tax would amount to roughly $12 million a year — pocket change to Amazon CEO Jeff Bezos, the wealthiest man in the world worth $112 billion, according to Forbes Magazine.
But Bezos and Amazon didn’t roll over.
They fought.
And who could blame them? The contorted logic of head-tax enthusiasts had made them the bad guys for building an economic colossus and 45,000 jobs in Seattle. If the verdict be guilty, then yes they are guilty of creating enormous prosperity in the Emerald City, which today enjoys a low unemployment rate of 3.1 percent.
Seattle has prosperity and a problem that accompanies it — rising homelessness caused by gentrification, and soaring property values that lead to higher rents and eventually a shortage of lowincome housing.
It demanded Amazon and other large tech firms pay for the solution.
For a time, Amazon worked quietly behind the scenes against the plan to stick the corporate giants with the tab for building millions of dollars of new housing for the homeless.
That eventually grew into full-scale rebellion, with other major corporate players including Starbucks and Microsoft co-founder Paul Allen’s investment firm Vulcan joining them.
“The city does not have a revenue problem — it has a spending efficiency problem,” said Amazon Vice President Drew Hederner. “We are highly uncertain whether the City Council’s antibusiness positions or its spending inefficiency will change for the better.”
The larger point is that major firms like this already contribute in a very large way to their community. They create jobs and wealth that turn into other businesses that create jobs and wealth and tax revenue all across Seattle. If the city gets comfortable confiscating parts of their profit to pay for rising social problems, they will do it again and again and you get the picture.
Pretty soon, Amazon gave the Seattle City Council a moment to weigh its values. Does it want job creators or does it want sugar daddies to pay for projects it won’t fund or could not persuade greater Seattle to bankroll with higher taxes on themselves?
Amazon put out the word that it would stop construction on a new building it had planned to put up in downtown Seattle and would put the brakes on other plans to occupy a building already under construction.
Some 7,000 jobs were in the balance, the reported.
On May 16, a watered-down version of the tax passed unanimously. But it took only a month of growing opposition for the City Council to reverse itself on a 7-2 vote in June.
The head tax was dead.
In Arizona, advocates of public schools, unconvinced that the governor or state Legislature have passed a sustainable pay increase for public-school teachers, are working to get the 150,000 signatures they need by July 5 to get the Invest in Education Act proposition on the November ballot.
If passed by voters, the law would raise the income-tax rate on the wealthiest Arizonans — 3.46 percentage points on individual income above $250,000 or household income greater than $500,000; and 4.46 percentage points on individual income above $500,000 or household income greater than $1 million.
The initiative would apportion 60 percent of new funds for teacher salaries and 40 percent for district and charter school operation-and-maintenance expenses, and it would permit funding to cover full-day kindergarten and pay hikes for student-support personnel, its backers say.
Those Arizonans who would be taxed represent a tiny percentage of the larger Arizona population, but they are the management class, the wealth generators, the job creators.
Tell them they’re exclusively responsible for solving the education-funding crisis in Arizona, a crisis that should be collectively borne by all taxpayers in the state, and they’ll wonder why and what you’ll stick them with next.
There’s a well-worn saying, “Tax something and you’ll get less of it.” It’s no less true of the wealth creators in our community.
These are sophisticated people who enjoy choices.
Like Jeff Bezos, they’ll begin to exercise their choices.
And they won’t just roll over.