Seattle Reverses Pre-Employee Tax After Pressure From Businesses
June 12 2018 - 7:56PM
Dow Jones News
By Nour Malas
The Seattle City Council voted to repeal a newly passed
per-employee tax on big companies designed to raise funds for
homeless services, a surprise move that came after fierce
opposition from the business community and growing public
debate.
The council passed the levy unanimously less than a month ago.
On Tuesday, seven out of nine council members voted to repeal it in
a special meeting which the council unusually opened up to the
public, bringing tense, emotional arguments from all sides.
Housing advocates who supported the tax to raise money to build
more affordable homes said they felt betrayed by their
representatives. Business owners who praised the council for its
U-turn said they supported efforts to help the homeless, but a new
tax wasn't the right approach.
"This is a defining day in the city of Seattle," said
Councilmember Lorena González before voting reluctantly in favor of
the repeal, which she characterized as a move forced by the
business community. Council members strained to voice their votes
over pro-tax protesters, who carried signs reading "Tax Amazon" and
chanted "We are ready to fight, housing is a human right!"
An antitax campaign backed by major Seattle companies, including
Amazon.com Inc., to put the measure to voters in a referendum in
November had gathered enough signatures by Tuesday -- more than
double the number needed, said John Murray, an antitax campaign
spokesman. City council members said that prompted them to move
pre-emptively to repeal the tax to avoid a long and costly
political fight in the coming months.
The Seattle tax passed May 14 after months of debate and a
last-minute flurry of public protests. The tax would have, starting
next year, levied $275 per employee on companies with more than $20
million in annual revenue, or about 3% of Seattle-based businesses,
according to the City Council. It was projected to raise about $47
million a year, to be spent on affordable-housing and homeless
services.
That version passed after pressure from businesses reduced what
had been a proposed $500-per-employee tax. Amazon, Seattle's
biggest employer, had slammed the tax and momentarily threatened to
stop its expansion in the city in protest, later saying it would
resume construction as planned but still criticized the city's
approach.
Amazon's protest was an uncharacteristically strong public
reaction for the company on a political issue. On Tuesday, the
company called the repeal vote "the right decision for the region's
economic prosperity." Amazon Vice President Drew Herdener said in a
statement the company was committed to being a part of the solution
to end homelessness in Seattle.
The city council's about-face shows how severely the tax debate
polarized Seattle.
It reflects the depth of divisions about how best to deal with
growing homelessness in West Coast cities where rising wealth,
spurred by the growth of technology companies and other
fast-growing businesses, has raised the cost of living, pushing
more people into poverty and homelessness.
"We ended up with a very divided community," said councilman
Mike O'Brien, who helped design the tax but voted Tuesday to repeal
it. "We reached a consensus that the best path for us is to pull
this back ourselves, rather than fight." Seattle Mayor Jenny
Durkan, a Democrat, supported the repeal.
Mr. O'Brien said the antitax campaign had become so heated in
the past month that neighbors turned on one another and people were
getting into shoving matches at the grocery store. The council
didn't yet have alternate proposals on homelessness, and he said he
wasn't sure what the next steps would be.
A count in January of homeless in King County, where Seattle
sits, found more people sleeping outside rather than in shelters
than ever before, though the annual rise in the overall number of
homeless had slowed from previous years. The count found 12,112
people homeless, a 4% increase from the year before.
At City Hall, those opposing the tax, organized into the
business-backed campaign called No Tax on Jobs, held
green-and-white signs supporting the repeal. The antitax campaign
raised more than $280,000 and gathered more than 45,000 signatures
to qualify a referendum on the tax for the November ballot, said
Mr. Murray, the campaign spokesman.
Mr. Murray said the support the antitax campaign was able to
gather reflected discontent with the city council's approach to
spending in general and its spending on homelessness in particular.
"This is about council accountability," he said.
Some taxpayers backed the idea that companies in Seattle should
help pay for homeless services, given that Washington's lack of a
state income tax helps them draw and retain workers. Others
rejected the tax as prohibitive to business growth.
Write to Nour Malas at nour.malas@wsj.com
(END) Dow Jones Newswires
June 12, 2018 19:41 ET (23:41 GMT)
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