Seattle city council gets contentious over business tax

Seattle Councilmember Sally Bagshaw broke from her colleagues at Tuesday’s budget meeting, calling for a more inclusive discussion over a business tax proposal. It prompted tense pushback on the dais.

“We are talking about taking money from a group that is not at the table, saying that they are willing to help solve this problem,” Bagshaw said. “I think raising a head tax in a vacuum is another nibble around the edges. Without bringing the business community to the table we will be alienating one important group that has been at the table with us and is willing to help us solve the problem.”

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“Councilmember Bagshaw, are you really saying that Amazon is not at the table? Amazon has the table,” Councilmember Kshama Sawant fired back. “We are on the outside.”

The point of contention centered on a proposed employee hours tax — sometimes called a head tax — on Seattle’s most profitable companies. While Bagshaw agrees companies should pay more toward the homeless and housing crisis, she objects to excluding them from the process. She wants service providers, neighborhoods and businesses “at the table” to discuss taxes and a plan for the crises – as the city did with the sugary beverage tax and HALA.

“We throw blocks of money as if we are an ATM machine without taking that big bold step forward that seems to elude us,” Bagshaw said.

“Targeting large businesses without their input strikes me as politically joyful for a few, but counterproductive in the long run,” she said. “We need businesses large and small at the table; we haven’t done that to date.”

Sawant, Lisa Herbold, Mike O’Brien, and Kirsten Harris-Talley object to Bagshaw’s sentiment. Her comments prompted a tense and agitated response.

“It is a false suggestion to make that we need an equal partnership (with businesses),” Sawant said, arguing that the most vulnerable in Seattle are not included in any partnership. Sawant also argued that the city did not achieve renters’ rights or a $15 minimum wage by including landlords and businesses.

“People are not going to be sheltered by giving them fairy tales,” she said. “We need real money on the table and we believe it is a modicum of justice for the biggest and most profitable corporations to pay a tiny bit.”

Seattle council pushes back

While Bagshaw wants to discuss how to raise funds, she also has bold goals for projects, such as placing a safe injection site in town and creating more 24/7 shelters. She has also challenged the city to build 1,000 housing units in 100 days. But her council colleagues point out that the city will have to fund all those projects.

From Councilmember O’Brien’s perspective, the city is in the process of awarding $30 million in contracts for homeless services ($100 million worth of bids have been submitted to the city). O’Brien said there is land waiting with lenders and investors ready to build more housing, but they won’t get built this year without more revenue.

“The concept behind the employee hours tax was to find a revenue source to help close that gap and hopefully put us on a path to reduce those crises by the end of 2018,” O’Brien said. “And do it in a way that we felt is fair; try to identify folks who benefited from the boom times in the last 5 or 6 years. We know that this city is generating lots of wealth … we also know that at the same time we are simultaneously creating lots of poverty in our city.”

“This tax alone is not going to solve that, but it is an attempt to try to fairly ask those benefiting from the up times to help contribute to the challenges those same boom times are creating,” he said. “Specifically, the fact that rents are continuing to go up in our city and more people are pushed out onto the street.”

The tax, as O’Brien proposes, would target the top 10 percent of profitable businesses in town (those that make more than $5 million annually) with a 5 cent per hour tax on each employee. The smallest 90 percent of businesses would not pay anything, he says. O’Brien admits the estimates are rough, but he expects the tax to pull in $20-25 million each year. It will take about a year to set up, but he wants to borrow from other city funds and pay them back through future tax revenue.

Harris-Talley said that the head tax will cover half of a $55 million funding gap for the homeless and housing projects.

“The thing that I’m sitting with is that the only context of whether or not we are doing it right, when we’ve been adding dollars up to this point, is if business feels good with the way we are raising revenue,” Harris-Talley said.

“Bartell’s, which is my family’s favorite store … they make $420 million in revenue each year,” she said. “… what we are asking is 3/10 of 1 percent of wages. That is an extraordinarily small amount to ask … and it’s going to set us up for you (Bagshaw) to not only think about 1,000 units in 100 days, but to be able to do that every year,” she said.

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“This top percent of business; people want to act like they are pinching and scraping,” she added. “You are not pinching and scraping when you are bringing home $420 million in revenue – you’re not.”

Despite the pushback, Bagshaw maintained her stance.

“Let’s have a plan that brings the whole community together … I want us to make sure we are including everybody in this conversation and moving forward in a united way,” she said. “There are certain businesses that should pay more, I think we will get to that point, but we need to include everyone.”

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