Seattle lacks path to help homeless
After ‘Amazon tax’ fails, housing crisis lingers
SAN FRANCISCO – After a bruising, month-long fight in which Amazon and other businesses squelched a new corporate head tax to fund homeless services, Seattle is struggling to find a path forward to deal with a crisis that has exploded in recent years.
Other metropolitan areas with rapidly rising housing costs also are grappling with residents priced out of the market. But Seattle’s tax situation puts it in an especially difficult position when it comes to raising funds to help its homeless residents.
It also could be a warning to the 20 cities vying to become home to Seattle’s second headquarters. Amazon stopped construction on a 17-story office building during the debate over the tax. It would have cost big businesses $275 per employee a year and was approved by a unanimous vote of the Seattle City Council on May 14, then rescinded by seven of nine members of that same council on June 12.
The construction pause “was a con- crete action as opposed to just a threat,” said Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, a nonpartisan, nonprofit in Washington, D.C., focused on federal, state and local tax reform issues. “It seems pretty clear now that whoever ‘ wins’ the HQ2 battle is very likely going to be giving Amazon a free pass on a wide variety of state and local taxes for some period of time.”
Called “the Amazon tax” by many in Seattle, the corporate head tax was meant to raise revenue to deal with the homeless crisis in the city and King
County. A count in January found 12,112 unsheltered people in the county, up 4 percent from a year ago. The numbers come even as unemployment in the county is 3 percent, lowest in the state, according to the Washington State Employment Security Department. The problem is two-fold, experts say. Housing is becoming less affordable, leading to more homelessness. At the same time Washington’s tax laws gave cities few options when it comes to raising funds for more housing. Rents in the city have risen 42 percent over the past seven years, fueled by the growth in high wage earners such as the many white collar workers at Amazon.com.
In 2011, 35 percent of county rental units would have been affordable to households earning below 50 percent of the median area income. In 2017, that affordability was 18 percent, according to a report released in May by consulting firm McKinsey & Co., which initially was engaged, on a pro-bono basis, by the Seattle Metropolitan Chamber of Commerce to study homelessness.
“This is the story of the last five years. This is that dramatic,” said Alison Eisinger, executive director of the Seattle/King County Coalition on Homelessness.
The tax, which only applied to businesses with annual gross revenues of more than $20 million, or about the top-grossing 3 percent of companies in the city, was hugely unpopular among businesses. Within weeks of it passing, a No Tax on Jobs coalition had raised $350,000 to oppose it and had collected nearly 46,000 signatures to put a measure on the November ballot.
The target of revenue, and not profit, was chosen because in many years Amazon reports no profits, plowing all its money back into the company. But that also caught up some companies such as grocery chains that historically deal with low margins and profits.
In the end, the city council decided it couldn’t win.