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Seattle's proposed tax to fight homelessness may hit Amazon hardest

Seattle has a thriving economy and booming housing market, and is home to successful businesses like Amazon and Starb...

Posted: Apr 24, 2018 3:52 PM
Updated: Apr 24, 2018 3:52 PM

Seattle has a thriving economy and booming housing market, and is home to successful businesses like Amazon and Starbucks. But it also has a homeless crisis and an affordable housing problem.

To help alleviate both, the Seattle City Council is weighing a proposal to impose a new tax on big businesses.

The proposed tax amounts to 26 cents per working hour per employee in Seattle. That works out to roughly $540 a year for every full-time employee.

Only businesses that generate at least $20 million of annual revenue in Seattle itself would be subject to the tax.

The legislation would affect less than 3% of employers in the city, or about 585 businesses, according to Councilmember M. Lorena Gonzalez, a co-sponsor of the legislation.

Related: Good luck buying a home in Seattle

Last fall, the council rejected a similar "head" tax proposal that would have raised less money but would have affected more companies.

The proposed tax is expected to raise $75 million a year, three quarters of which would be used to build roughly 1,800 affordable housing units. The other quarter would be spent on emergency and shelter services for the homeless.

By 2021, the per-head tax would convert to a 0.7% payroll tax and still raise $75 million, according to materials from the Council.

Amazon could pay $20 million or more a year

The company that likely would owe the most under such a tax is Amazon, Seattle's largest private sector employer. It employs more than 45,000 people in the city. If the proposed tax goes into effect, Amazon could be subject to a head tax north of $20 million a year.

Amazon, which declined to comment on the proposal, notes that it already contributes economically in many ways to Seattle. For example, it will provide a permanent location for a shelter in one of its new office buildings by 2020. It would be run by the nonprofit Mary's Place, which already had temporary use of two vacant Amazon buildings to shelter the homeless since 2016.

Starbucks did not respond to a request for comment.

Related: Typical Amazon employee makes less than you think

Prosperous big businesses can in turn generate a lot of economic activity and revenue for their host city. And they may donate goods, services or money to critical social causes.

But the co-sponsors of the bill note that a major cause of homelessness is the higher cost of housing that results when more workers move to a city for jobs that pay more than long-time residents have been earning. And the demand to build affordable housing doesn't keep pace.

"A progressive tax on businesses most benefiting from this growth is our best option because we already rely heavily upon regressive property and sales taxes that hit everyone equally," Councilmember Lisa Herbold said in a statement.

Property and sales taxes are the city's main source of revenue since Seattle does not have an income tax. Businesses there also pay a business and occupancy tax.

Critics of the Council proposal, however, say it's a tax on jobs that could curb growth.

While a head tax isn't unheard of, "they are rare, and for good reason: most cities recognize that it's not in the best interest to penalize employment," said Jared Wolczak, a senior policy analyst at the Tax Foundation.

Certainly a tax that is seen as too onerous could influence a company's behavior, noted Tax Policy Center researcher Richard Auxier. But it's also true that a company locates itself in a place for more reasons than taxes, Auxier added. For instance, a business has a better chance of prospering in a socially stable city with good infrastructure, good schools and an educated workforce.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 484675

Reported Deaths: 9480
CountyCasesDeaths
Harrison33151493
Hinds31184589
DeSoto30803365
Jackson23735349
Rankin21390373
Lee14963221
Madison14206272
Jones13430227
Forrest13199241
Lauderdale11623307
Lowndes10501176
Lamar10258130
Pearl River9151221
Lafayette8268137
Hancock7534113
Washington7144152
Oktibbeha6989124
Monroe6533167
Neshoba6489201
Warren6486166
Pontotoc632993
Panola6278127
Marshall6165126
Bolivar6129145
Union576089
Pike5626138
Alcorn540590
Lincoln5310132
George473572
Scott461596
Leflore4495140
Tippah448180
Prentiss447979
Itawamba4457100
Adams4429117
Tate4420103
Wayne434667
Simpson4339114
Copiah432988
Yazoo423686
Covington417192
Sunflower4155104
Marion4111104
Coahoma3986100
Leake398286
Newton372375
Grenada3565104
Stone351360
Tishomingo338389
Attala325987
Jasper316062
Winston305691
Clay297374
Chickasaw287866
Clarke283290
Calhoun267741
Holmes262887
Smith252249
Yalobusha224347
Tallahatchie221150
Walthall211758
Greene209945
Lawrence207034
Perry201054
Amite199452
Webster196942
Noxubee179339
Montgomery172954
Jefferson Davis168342
Carroll162537
Tunica154235
Benton143035
Kemper138840
Choctaw128826
Claiborne127134
Humphreys127038
Franklin116928
Quitman104227
Wilkinson102036
Jefferson91533
Sharkey63020
Issaquena1937
Unassigned00

Alabama Coronavirus Cases

Cases: 790648

Reported Deaths: 14025
CountyCasesDeaths
Jefferson1117431765
Mobile709021237
Madison50032633
Shelby36350315
Baldwin36278495
Tuscaloosa34034548
Montgomery33229678
Lee22712220
Calhoun21297410
Morgan19852335
Etowah19341462
Marshall17716274
Houston16862386
St. Clair15479305
Cullman14659258
Limestone14609188
Elmore14507264
Lauderdale13557281
Talladega13015236
DeKalb12214237
Walker10604330
Blount9735157
Autauga9691137
Jackson9400158
Coffee8934175
Dale8631173
Colbert8545184
Tallapoosa6688181
Escambia6599121
Covington6466167
Chilton6395144
Russell608755
Franklin5805101
Chambers5425134
Marion4818120
Dallas4713189
Clarke464079
Pike463297
Geneva4433117
Winston427395
Lawrence4124108
Bibb410281
Barbour347470
Marengo326485
Monroe320253
Butler318490
Randolph306656
Pickens306474
Henry302658
Hale293085
Cherokee290855
Fayette280373
Washington245548
Crenshaw238770
Cleburne236751
Clay229265
Macon220658
Lamar200443
Conecuh182046
Coosa170835
Lowndes170858
Wilcox159736
Bullock149543
Perry136537
Sumter124736
Greene121443
Choctaw73427
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