MYNORTHWEST BLOG

Opinion: It’s time to stop letting Amazon hold Seattle hostage

Jul 9, 2020, 1:02 PM | Updated: Jul 11, 2020, 12:14 pm
Amazon Seattle, tech companies...
The Amazon Spheres in downtown Seattle. (AP Photo/Ted S. Warren)
(AP Photo/Ted S. Warren)

In the wake of Seattle City Council passing a long sought-after big business tax, many have begun to ring the alarm, warning that it may lead to companies like Amazon picking up stakes and leaving town.

Seattle council passes landmark big business tax proposal

The Downtown Seattle Association labeled the measure “ill-advised.” The Seattle Times Editorial Board called it “bad policy.”

“This is how a city loses vibrancy,” it claimed.

The argument against the tax boils down to a pair of assumptions: That it’s too onerous for companies, and that we shouldn’t let it drive businesses out of the city. Neither is accurate.

First: The measure passed by city council was a reasonable compromise amounting to a relatively modest tax (and less than half of what Councilmembers Kshama Sawant and Tammy Morales were pushing for early in 2020).

The tax itself applies to any company with over $7 million in payroll expenses, levying 1.4% on each employee earning between $150,000 and $399,999, and 2.4% for anyone earning $400,000 or more. The basic math works out to a company shelling out just $9,600 for each Seattle-based employee who earns $400,000. For employees earning $150,000, that number plummets to $2,100 per person. The money will also have to be paid by the company, and can’t be taken from workers themselves.

For a company that pulled in over $120 billion in gross profit between March 2019 and March 2020, this is a rounding error. And if we’re trying to figure out who really needs this money right now — a city staring down the barrel of a pandemic, a massive budget shortfall, and a homeless crisis, or a company run by the richest man in the world — it’s not exactly a tough question.

That aside, odds are it would cost the company more to abandon the South Lake Union office spaces it spent hundreds of millions of dollars building than it would to stay and just pay the council’s tax.

Second: In 2018, Amazon warned the city that if it went through with its controversial head tax, it would be forced to leave town, even going so far as to halt construction on a downtown Seattle tower. City council quickly retracted the tax, and Amazon began moving jobs out of Seattle anyway. We saw that firsthand as thousands of employees were moved to Bellevue, in the midst of a massive campaign for a second headquarters in Virginia.

That saw Amazon making plans in 2019 to build the largest office tower Bellevue’s ever seen. It also has roughly seven spaces in the city it either plans to move into or is already occupying. That includes roughly 2,000 employees in Expedia’s former Bellevue corporate headquarters, with plans to move another 4,500 workers into that building by the end of 2020.

Employees from Amazon’s worldwide operations team also began moving to Bellevue last April, with the company planning to eventually have the several thousand employees on that team entirely operating from the Eastside. That team is responsible for ensuring the delivery of packages to customers, and oversees 250,000 employees worldwide across 173 fulfillment centers. It manages the company’s delivery trucks, as well its fleet of 40 airplanes.

Sawant: Amazon tax ‘only thing’ that can rescue Seattle economy

The larger point is that Amazon is going to make decisions that help its own interests, not Seattle’s. And if it does truly, sincerely care about the city it occupies, then we should be asking ourselves why it would leave town over even the most minuscule of tax burdens.

That’s all without even mentioning the fact that Amazon spent $1.4 million during 2019’s election cycle in a failed bid to flip Seattle City Council. This is as good a time as any to remember that large corporations should exist to enhance cities, rather than aspire to run them.

That being so, no company should be able to hold an entire city hostage over reasonable proposals asking that they pay their fair share. If that’s really all it takes to make Amazon leave, then it sends a clear message that multi-billion dollar companies don’t put down roots in cities because they care about their residents — they’re here to make the most money they possibly can, and it would serve us well to treat them accordingly.

Questions, comments, or feedback? Follow Nick Bowman on Twitter at @NickNorthwest to weigh in, or reach him by email at nbowman@bonneville.com

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Opinion: It’s time to stop letting Amazon hold Seattle hostage