Seattle Nixes New Head Tax after 28 Days

In an historic and unprecedented decision, the city council in Seattle, Washington has voted to repeal a controversial head tax on large employers like Amazon less than a month after it was approved. The vote for repeal was 7-2 Tuesday. Mayor Jenny Durkan says she will sign it into law.

The city council voted unanimously last month to place an annual tax of $275 per employee on the city’s highest grossing employers. The money was supposed to go toward the city’s homelessness problem and was heralded as a potential model for other cities, including many right here in California

Note to those cities: proceed with caution.

The reaction from Seattle’s largest companies was quick and fierce. After learning that it would have to pay an additional $12 million to $20 million per year in taxes, Amazon immediately halted plans for new offices in the city, placing thousands of Seattle jobs at risk. A business-backed campaign was soon launched to get a referendum on the November ballot and signature gatherers could barely keep up with the number of people eager to sign.

The city council reversed itself begrudgingly after realizing that the tax was highly unpopular even with many voters. One council member accused Amazon of “blackmail.”

Governing.com discusses the fallout from Tuesday’s decision.

For Seattle leaders, the vote amounts to an embarrassing about-face. Only a few weeks ago, Durkan and council members were hailing the tax as an important step in the city's response to a homelessness state of emergency declared in 2015.

They didn't count on how quickly business leaders would mount a big-money referendum campaign and apparently misjudged how many ordinary voters would support the effort out of frustration with City Hall's handling of homelessness.

Now the mayor and council members have no backup plan to raise the about $47 million per year the head tax would have collected from about 600 companies -- those grossing at least $20 million a year.


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