Amazon, Starbucks Furious After Seattle Passes Controversial “Homeless Tax”

Despite Amazon’s decision to halt construction on a new tower and threats to sublease space in another newly built downtown skyscraper, Seattle Mayor Jenny Durkan and the City Council have passed a controversial “homelessness tax” that will require the city’s largest companies to pay an additional $300 a year per full time employee based in the city.

And while the law has been significantly watered down from the version introduced last month by the city council, Jeff Bezos still isn’t happy about it.

To wit, the company said in an official statement that it’s still “apprehensive” about expanding the number of employees it has based in the city, as Fortune reports.

“We are disappointed by today’s City Council decision to introduce a tax on jobs,” Amazon said in a statement. “While we have resumed construction planning for Block 18, we remain very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here.”

Amazon has resumed construction on its 17-storey Block 18 tower, but we imagine the company now has even more incentive to shift employees to its planned HQ2, though, as CNNMoney warned in a recent piece, Amazon’s strident reaction to the proposed tax in Seattle might give some of its suitor city’s reason to reconsider (as foolish as that might seem from an economic development perspective).

The law will require employers who generate more than $20 million in gross revenues within the city limits to pay roughly 14 cents per man hour per employee every year – which comes out to roughly $275 per employee. Roughly half of the money collected by the tax will be paid by Amazon.

So, at the end of April, the Seattle City Council released draft legislation that would force companies with revenues of over $20 million in the city to pay 26 cents for each hour worked by a Seattle-based employee, or roughly $540 per head per year. This “head tax” was to apply over 2019 and 2020, generating $86 million a year for social programs, before turning into a 0.7% payroll tax. (The annual proceeds of the tax were originally calculated at $75 million before the council revised its estimates.)

However, with Mayor Jenny Durkan threatening to veto the tax because she was concerned about its impact on employment, the measure had to be watered down to pass.

In the end, the version that passed – unanimously – will see large employers pay 14 cents per head per hour, or $275 per head per year. The tax will now generate $47 million a year, and it will run for five years, rather than turning into a payroll tax after a two-year run.

For what it’s worth, Amazon says it has independently done more to ease homelessness than the city government, touting a corporate initiative to donate space to shelter 200 homeless people in one of Amazon’s new buildings.



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