Published: Tue, May 15, 2018
Money | By Ralph Mccoy

Seattle approves 'Amazon Tax' to alleviate city's affordable housing crisis

Seattle approves 'Amazon Tax' to alleviate city's affordable housing crisis

Seattle's new tax will raise $45 million to $49 million each year from employers, and the money will be used to fight homelessness in the city, reports GeekWire.

But the mayor expressed reservations about the effect the $500-per-job tax might have on the city's economy, threatening a veto and vowing to work toward a compromise, leading to the $275 rate. The tax would end after five years unless renewed by the city. Previous year the city spent $68 million on homeless services.

Following the change, Amazon has said it will now continue construction on the new building but is still considering whether to lease space in a second tower. That original compromise was voted down Friday.

Council members who sponsored the initial proposal said $48 million annually wasn't enough to address the city's urgent housing needs but conceded they couldn't get the six votes needed for a larger tax and to override a potential veto by the mayor, who favored a smaller tax and faced intense pressure from businesses.

The tax, which has been unofficially nicknamed the "Amazon Tax", - named after the online retailer which is headquartered in Seattle - will affect businesses that generate annual revenue of $20 million or more, the Seattle Times reported.

Whether Amazon will accept the new $275 per-employee cost remains to be seen.

Almost 600 large for-profit employers - about 3 percent - making at least $20 million in gross revenue would pay the tax that would begin in 2019.

Bezos also halted two construction projects in Seattle pending the outcome of the head-tax debate, which Sawant called extortion.

Given extortion from @JeffBezos & Goliath-like clout of @amazon, even a smaller tax is huge victory & pushback on corporate bullying. As it passed, socialists pushing for a larger tax broke out in a chant: "We'll be back for more!"

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Amazon, Starbucks, and business groups sharply criticized the council's decision after Monday's vote. The two office spaces would accommodate about 7,000 new Amazon jobs. Amazon's plans in Seattle after today's vote are not clear.

Affordable housing advocates have held several events in support of the "head tax" at Amazon's Seattle headquarters. "We'll be back for more!"

The city's homeless population is growing, behind only NY and Los Angeles. The city council president, Bruce Harrell, spoke to a growing "fear of what this city is becoming". A recent audit of King County's response to the crisis gives weight to that view.

Other major companies to be hit include Starbucks, which accused the council of wasting millions of dollars it already spends each year trying to tackle homelessness.

But the city says homelessness is a moving target.

"We have to massively scale up the number of deeply affordable housing units that are available to those that are living and suffering here on the streets of Seattle", she said.

Hederner, the Amazon vice president, said sharp increases in the city of Seattle's revenues have outpaced the population growth of the city during the same period.

The unanimous vote in favor of the amended tax proposal occurred at a raucous public meeting at which advocates for the homeless and affordable housing - some holding placards saying "Tax Amazon" - argued in favor of a stiffer tax on the company and other businesses.

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