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Seattle council approves controversial head tax on business

The Seattle City Council approved its controversial head tax Monday, but the version that garnered enough support to pass was an amended proposal which cut the total tax on the city’s largest companies.

RELATED: Mayor Durkan reacts to head tax passage, says she’ll sign it

The amended head tax reduces the amount businesses pay per employee from $500 to $275 per year, with a sunset clause of 2023. The amendment to the original bill passed 8-1. The final head tax vote — on the lower amount — was unanimous.

The tax will target businesses grossing more than $20 million per year. It will raise approximately $50 million for low-income housing, homeless shelters and emergency services.

Council members worked with central staff over the weekend to find a compromise to the $500 head tax that the Finance and Neighborhoods Committee passed on Friday. The plan was supported by Lorena Gonzalez, who voted down another amendment on Friday that would have taxed businesses $250 per employee.

“It seems to me that the debate about this is about the fear of what this city is becoming,” Councilmember Bruce Harrell said, noting that people see homelessness on one hand and successful businesses on the other – each changing the character of Seattle.

RELATED: Seattle head tax 101

Teresa Mosqueda, who also supported the $500 head tax, says the compromise is a “step forward.” At Monday’s meeting she said that this tax is “just the beginning of the fight.” She promoted building massive, new housing on public land.

“This is a moral decision that we are making,” Mosqueda said. “Housing is a human right.”

The Seattle Times says Gonzalez, Lisa Herbold, Mosqueda, and Mike O’Brien are sponsoring the ordinance. Those four opposed the amendment to lower the head tax to $250 per employee on Friday.

Sawant stands out

One council member who stood out from her colleagues was Councilmember Kshama Sawant. She argued that it was her movement that deserves the credit for the tax, despite the number being much lower than the $150 million tax she originally wanted. Sawant voted against the amended bill, but voted for the final version, saying it was the movement’s victory.

PHOTOS: Seattle head tax meeting

“Let’s face it, the movement is the single most important factor without which we would not even be having this discussion,” Sawant said. “And while council members talk about the sleepless nights they have, I don’t think it compares with the hard work and the dedication of the so many hundreds of people in this movement.”

“Whose interests are council members Sally Bagshaw, Debora Juarez, Rob Johnson, and Bruce Harrell defending when they fight to reduce the amount big business will be taxed?” she said. “…. For some reason, council members who say they oppose Trump’s tax cuts are pushing for the same polices here in Seattle.”

Sawant also called out Mayor Jenny Durkan for implying she would veto the original head tax proposal, calling her the “mayor of Amazon’s billionaires.” She called on her base to continue fighting against “Amazon’s extortion.” Sawant said she expects Amazon to “bully Seattle” and threaten to lay off workers in 2023 when the council could decide to renew it.

Seattle businesses respond

Following the passage of the head tax, James Sido with the Downtown Seattle Association released the following statement:

We appreciate Mayor Durkan’s efforts to significantly modify the City Council’s ill-conceived proposal to tax jobs in Seattle. However, a tax on jobs at any level is bad economic policy and will negatively impact Seattle’s economy and city tax revenues. New polling shows that a majority of Seattle voters also feel this is bad public policy. Reducing homelessness will require a transparent, coordinated and comprehensive countywide strategy. Mayor Durkan and Executive Constantine have taken an important steps toward implementing a regional approach. We urge the Council to coordinate its work with this effort. It is through greater collaboration and clear and effective strategies, not taxing jobs, that we will help more people off the streets in our communities.

Amazon also responded to the head tax passage saying that the company is “apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here.”

Key details

    • The Seattle City Council’s Finance and Neighborhoods Committee approved the original head tax bill May 11
    • The approved bill would tax about 3 percent of Seattle’s businesses $500 per employee, per year
    • The bill was narrowly approved by the committee with a 5-4 vote
    • Several amendments, including one which would have slashed the tax on businesses in half, were rejected by the committee May 11
    • Kshama Sawant, Mike ‘O’Brien, Lisa Herbold, Teresa Mosqueda and Lorena Gonzalez sponsored the original legislation
    • Sally Bagshaw, Bruce Harrell, Debora Juarez, and Rob Johnson did not support it in its current form
    • Mayor Jenny Durkan indicated she won’t sign the head tax into law if it is passed in its original form
    • If the bill passes with a 6-3 vote, the mayor won’t be able to veto it
    • An amendment that appears to have the support of the majority of the council will be voted on Monday. It would create a tax of $275 per employee per year

Should Amazon’s threat be taken seriously?

Jon Scholes, president and CEO of Downtown Seattle Association, says Amazon’s threat to pause construction in the city shouldn’t be taken lightly.

At the beginning of May, Amazon reportedly told developers to halt construction on a 17-story office building until after the council votes on the head tax. It’s seen as a threat — and, by some, blackmail.

“If Amazon pauses in Seattle, it will mean lost jobs directly and indirectly,” Scholes told Seattle’s Morning News ahead of the Monday council meeting.

He says that even if legislation protects smaller businesses from the head tax, those businesses will still feel the negative impacts.

“They will feel it in the form of lost customers and lost revenue,” Scholes explained.

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