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Seattle City Council repeals head tax one month after passage

While justifying her support of a head tax repeal, Seattle Councilmember Lisa Herbold said the opposition to the tax was just too great.

PHOTOS: Special city council meeting

The opposition, she said, has “unlimited resources.”

On Tuesday, just under a month after unanimously approving a head tax on businesses earning more than $20 million per year, the council repealed the tax with a 7-2 vote. Businesses would have been taxed roughly $275 per employee per year, raising $47 million annually to address the homelessness and affordability crises in the city.

Teresa Mosqueda, one of two council members to vote against a repeal, said she is concerned that a repeal will result in months of inaction and more regressive taxes. The process to implement a head tax took months, she pointed out. And, if the city wants to continue getting people off the streets, it will need additional funding. She called on businesses who opposed the head tax to come to the table with progressive ideas.

Their comments came during a special meeting of the city council to discuss legislation to repeal the head tax. The council chambers became rowdy during a public comment period that went on for more than twice as long as originally planned. At least one person was forced to leave after her one-minute at the podium was up and she refused to stop talking.

The demeanor didn’t change as the meeting continued. As the council attempted to vote, supporters of the head tax shouted chants so council members could not hear each other. This prompted Sawant to refuse to vote because the audience could not hear the votes. She eventually yielded and voted against the repeal as other council members left the room, not swayed by the antics.

Numerous people in support of the head tax expressed similar concerns as Councilmember Sawant, who accused her peers of making a last-minute decision and “caving” to Amazon. “Backroom betrayal” and “caving” were thrown around frequently.

“Jeff Bezos is our enemy, he is our enemy,” Sawant said before the council voted.

After the repeal passed, Amazon responded saying it is committed to solutions:

Public support and opposition

A man who identified himself as an Amazon employee said he supports the tax after seeing homes in his neighborhood double in price. The city, he said, needs heavy rezoning to allow for denser, more affordable housing.

Others, however, pushed for a full repeal.

A signature gatherer for the “No Tax on Jobs” campaign said she was tired of not seeing results and not knowing exactly how taxpayer money is being spent.

Political activist Tim Eyman made an appearance during public comment, arguing that the public should have the right to vote on the head tax. He said the referendum process would allow the entire city to learn more about the head tax and then decide if it is right.

“What about the voters?” he asked. “Why shouldn’t they be heard?”

Seattle head tax repeal

A summary of the repeal bill states:

This ordinance repeals the Employee Hours Tax that would have otherwise taken effect on January 1, 2019. The City Council passed this ordinance on May 14th and it was signed by the Mayor on May 16th. As adopted, the tax was projected to generate $47.4 million per year, with the intent that this revenue be dedicated to funding both immediate services for the homeless and long-term affordable housing.

The Seattle head tax affects the city’s largest employers making more than $20 million annually.

On Monday, Harrell questioned if a tax on jobs was really best for the future of the city. He said the city needs to convince the public that it is spending money to fight the homeless crisis wisely and, so far, that hasn’t been accomplished.

“I think this is a wise move, to press the reset button,” he added.

Harrell said he was impressed with how strongly the business community came out in opposition of the tax. He would like to see that same energy used by the business community to help tackle the homeless crisis.

Head tax repeal efforts

The meeting comes after an announcement that an effort to repeal the head tax gathered enough signatures from Seattle residents to place a referendum on the November ballot. That referendum would put a head tax repeal up for a vote. The No Tax on Jobs Coalition is expected to submit its signatures Tuesday, the same day as the council’s special meeting.

RELATED: Head tax 101

Harrell’s bill also addressed the signature gathering effort. He argues that the city will be billed if the referendum is placed on the ballot, stating:

Signatures are currently being gathered in an effort to repeal the Employee Hours Tax ordinance via referendum, and King County Elections will bill the City some additional cost for having the repeal measure on the November 2018 ballot. If the City acts to repeal this legislation without the referendum, these additional election costs will be avoided.

During public comment on Tuesday, a signature gatherer for the “No Tax on Jobs” campaign told the council they had collected more than 40,000 signatures, well over the required number of nearly 18,000.

Council and mayor release statement

A statement was released from Mayor Jenny Durkan Monday, with council members’ names attached. Council members include: Bruce Harrell, Sally Bagshaw, Lorena Gonzalez, Lisa Herbold, Rob Johnson, Debora Juarez, and Mike O’Brien.

We know that there are strong passions and genuine policy differences between neighbors, businesses, community leaders, and people across our City on how to best address our housing and homelessness crisis. This crisis has been years in the making and there are no easy solutions. The crisis is tied to a range of complex causes, including lack of affordable housing, unmet mental health and substance abuse issues, and systemic racial disparities in our foster care, criminal justice and educational systems.

In recent months, we worked with a range of businesses, community groups, advocates, and working families to enact a bill that struck the right balance between meaningful progress on our affordability and homelessness crisis while protecting good, family-wage jobs. Over the last few weeks, these conversations and much public dialogue has continued. It is clear that the ordinance will lead to a prolonged, expensive political fight over the next five months that will do nothing to tackle our urgent housing and homelessness crisis. These challenges can only be addressed together as a city, and as importantly, as a state and a region.

We heard you. This week, the City Council is moving forward with the consideration of legislation to repeal the current tax on large businesses to address the homelessness crisis.

The City remains committed to building solutions that bring businesses, labor, philanthropy, neighborhoods and communities to the table. Now more than ever, we all must roll up our sleeves and tackle this crisis together. These shared solutions must include a continued focus on moving our most vulnerable from the streets, providing needed services and on building more housing as quickly as possible. The state and region must be full partners and contribute to the solutions, including working for progressive revenue sources. Seattle taxpayers cannot continue to shoulder the majority of costs, and impacts.

Mosqueda and Sawant

Council members Teresa Mosqueda and Kshama Sawant did not sign onto the joint statement from the mayor and council colleagues. In her own statement, Mosqueda said that she has had concerns about the head tax. She will not support any repeal without a replacement strategy to fund homelessness programs. Mosqueda also said:

I understand people’s frustrations. This City Council is in the midst of correcting the course set by the previous administration …. We know if we want to permanently move people off the streets we must provide housing and services. EHT represents a down payment to a better solution.

Mosqueda said that the region’s approach — One Table — to the homelessness and affordability crises is “indefinitely paused.” She said that a payroll tax was considered at One Table, but leaders moved away from it at the request of “a few large businesses.”

Councilmember Sawant responded with an “Urgent action alert” saying that the meeting is a “backroom betrayal.”

“I am going to be voting no on this bill when it comes to a vote,” Sawant said at the council’s Monday meeting.

Sawant said that if the repeal referendum heads to the November ballot, it would be opportunity to “set the record straight” from all the “lies” from big businesses like Amazon. She accused the council of rushing through the repeal.

“No one should be surprised that big business is throwing their weight around to repeal this tax,” she said. “I have a newsflash for the elected officials who actually supported this tax on May 14 but are now capitulating to Amazon, this fight was never going to be easy. In the face of a mass corporation misinformation campaign, a campaign of lies and attacks, we do have to fight back.”

Business community responds

Monty Anderson, the Executive Secretary of the Seattle Building and Construction Trades Council, called the possible repeal, “a victory for everybody.” Anderson led the trade union opposition to the tax. He found out there was a council repeal in the works when he got a call from the mayor’s office Monday morning.

“We got stuck right behind the eight ball right away and we fought back pretty hard,” he said. “We were pretty vocal to say the least.”

“But people had other concern that I was not aware of until all of this came up. The fact that business is going to re-engage the city in a long-term solution, I think it’s a victory for everybody.”

Marilyn Strickland, the Seattle Metropolitan Chamber of Commerce president and CEO, agreed.

“The announcement from Mayor Durkan and the City Council is the breath of fresh air Seattle needs. Repealing the tax on jobs gives our region the chance to addresses homelessness in a productive, focused, and unified way.

“From day one, the Seattle Metro Chamber has been clear that a tax on jobs is not the way to address the regional homelessness crisis. Our business community is ready to work on solutions—from employment, to technological innovation, to housing. We look forward to collaborating with federal and state government and the region to help address issues that affect housing stability.”

Seattle head tax response

Ever since the Seattle head tax was passed in May, it has caused concern throughout the state. Pierce and Snohomish counties said they did not think such a tax was a good idea. Pierce County went a step further and coordinated tax incentives to draw businesses from the Seattle area to their region. They even made a promotional video noting that Pierce County does not have a head tax.

State lawmakers also began crafting legislation to draw businesses to other parts of the state in an effort to counter the message toward business coming out of Seattle. State Representative Jim Walsh called Seattle’s behavior “juvenile” when discussing its tax approach to business.

Meanwhile, businesses such as Zillow, said they were considering expanding outside of the city in response to the Seattle head tax. Amazon called the Seattle City Council’s approach to business “hostile,” and said it was questioning its growth in the city. At the same time, Amazon began adding jobs to other tech hubs in Boston and Vancouver B.C. where the retail giant received a particularly warm welcome.

Starbucks also disagreed with the city’s head tax.

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