The Middletown Press (Middletown, CT)

Note to Seattle: If you want less of something, put a tax on it

- By Thomas L. Knapp Thomas L. Knapp is director and senior news analyst at the William Lloyd Garrison Center for Libertaria­n Advocacy Journalism.

What’s the best way to help the homeless? While there are lots of reasons for homelessne­ss in America, ranging from mental illness to the use of e.g. “sex offender registries” to put certain areas offlimits to certain people, poverty likely places high on the list — and a major cause of poverty is the inability to find a good job.

Apparently the city council of Seattle, Washington, disagrees. On May 14, the council voted unanimousl­y to start reducing the Emerald City’s employment opportunit­ies for the purpose of funding the city government’s homeless services and affordable housing schemes.

They didn’t put it that way, of course. In fact, at least one city council member accused companies like Amazon and Starbucks of “blackmail” for pointing out the obvious and inevitable consequenc­e of demanding that employers pay a $275 annual “head tax” on each full-time employee in the city.

According to the Associated Press coverage of the tax, it would “raise roughly $48 million a year to build new affordable housing units and provide emergency homeless services.” That figure is likely based on on an untenable assumption: That Seattle will continue to have as many or more full-time employees working within the city limits after the tax is implemente­d than it had before the tax was passed. The tax may raise some money, but its main effect will be to increase unemployme­nt in Seattle.

Its secondary effect will be to raise the cost of building “affordable housing” in the city since the labor cost for every carpenter, bricklayer, electricia­n, etc. will go up. And the cost of everything else, too. Grocers and cab companies and landscaper­s and restaurant­s aren’t going to just grin and fork over the tax. They’re going to raise prices to cover it.

Both of those effects lead to a tertiary effect: Fewer jobs and more expensive housing, transporta­tion, food, etc. will mean more, not fewer, homeless people.

Naturally, the likely “solution” to the problem getting worse rather than better will be to increase the tax. And that likelihood creates “regime uncertaint­y.” Perhaps some companies would consider the other benefits of locating in Seattle worth $275 per year per employee. But if the tax can go from $275 to $500 to $1,000 at the drop of a hat, Seattle just won’t look like a good place to start a new enterprise or expand an existing one.

I dislike “targeted” tax measures because they smack of social engineerin­g. But if Seattle’s politician­s really want to help the homeless by messing with the tax code, the better way would be to offer tax BREAKS to companies that employ people, and especially companies that employ people to build homes.

Seattle cannot and will not tax its way out of its homelessne­ss and housing problems. But it should at least stop looking for ways to tax itself more deeply into those problems.

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