Seattle Poised to Reverse New Tax After Pressure From Businesses
13 June 2018 - 5:07AM
Dow Jones News
By Nour Malas
Seattle is poised to repeal a newly passed tax on each big
company's employee designed to raise funds for homeless services,
after fierce opposition from the business community.
The Seattle City Council, which passed the levy less than a
month ago, will convene a special meeting later Tuesday to vote to
repeal it. The move comes after a campaign backed by major
companies that opposed it, including Amazon.com Inc., to put the
measure to voters in November gained momentum in recent weeks.
The tax would go into effect next year.
After initially supporting the measure, which passed unanimously
in May, Seattle Mayor Jenny Durkan and seven of the council's nine
members said in a statement Monday they now backed a vote on
repealing it. They said a long and costly political fight would be
counterproductive to working toward sheltering and helping the
homeless.
"We ended up with a very divided community," said councilman
Mike O'Brien, who helped push through the tax proposal but was now
ready to repeal it. "We reached a consensus that the best path for
us is to pull this back ourselves, rather than fight."
The about-face shows how severely the tax debate polarized
Seattle, pitting some politicians and city residents against big
employers like Amazon, Starbucks Corp. and Nordstrom Inc.
It also reflects the depth of divisions about how best to deal
with growing homelessness in West Coast cities where wealth,
spurred by technology companies and other fast-growing businesses,
has raised the cost of living, pushing more people into poverty and
homelessness.
Among councilmembers ready to repeal the tax, some characterized
it as caving to business interests but said they had no better
options. Councilmember Lorena González, who signed the statement on
the repeal, criticized the business community for "choosing to
double-down on polarizing the issue of homelessness and fostering
divide amongst Seattle residents."
"I regret that it appears that powerful and well-resourced
interests have swayed public opinion to believe that more is not
needed," she said.
The Seattle tax passed after months of debate and a last-minute
flurry of public protests on both sides of the issue. The tax would
have 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 the business community
reduced what had been a proposed $500-per-employee tax.
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.
In a rare public stance on a political issue, Amazon --
Seattle's biggest employer -- slammed the tax and momentarily
threatened to stop its expansion in the city to protest it. After
the reduced tax passed, the company said it would resume all
construction as planned but still criticized the tax and said the
city's approach forced companies to reconsider their future
there.
A spokesman for Amazon said the company had no new comment on
the repeal effort.
Since passage of the tax, a campaign backed by a range of
Seattle businesses called No Tax on Jobs raised more than $200,000
and hit the streets gathering signatures to qualify a referendum on
the tax for the November ballot.
The campaign was due to submit its signatures this week,
Councilmember O'Brien said, and with enough to qualify a
referendum, the City Council decided to repeal the tax itself.
Mr. O'Brien said the antitax campaign had become so heated 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.
Write to Nour Malas at nour.malas@wsj.com
(END) Dow Jones Newswires
June 12, 2018 14:52 ET (18:52 GMT)
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