Seattle approves plan for ‘reasonable’ tax on its largest businesses to help pay for housing, homelessness — UPDATE

The Seattle City Council Monday afternoon chose a smaller, simpler, “reasonable” compromise to create a new tax on the city’s largest companies to help pay for affordable housing and homelessness services.

In a 8-1 vote, the council — some reluctantly — chose a new version of the plan introduced as Amendment 24 during the afternoon full council session with sponsorship from eight of the nine members — all save Capitol Hill’s District 3 rep, Kshama Sawant.

UPDATE: The council unanimously approved the final ordinance modified by approved Amendment 24 with a 9-0 vote.

“I’ve been really struggling with how I feel about this compromise because I’ve been really, really focused on the spending plan and the dire needs of our communities,” co-sponsor of the original legislation Lisa Herbold said before the vote. But she said she was proud the plan for a new tax had “evolved more towards progressivity” and would do things like protect the city’s small businesses.

Friday, a council committee approved a veto-vulnerable $500/employee version of the tax.

Monday’s $48 million compromise legislation avoids a collision course with a Mayor Jenny Durkan-threatened veto and will implement a $275 per full-time employee tax on companies reporting $20 million or greater in annual “taxable gross receipts,” eliminated the proposed transition to a payroll tax, and gives the tax plan a five-year window after which it will be evaluated and will require new legislation to continue. UPDATE:  “I believe in my bones that our city will continue to be the place that invents the future, and continue to be the most exciting and innovative city anywhere,” Durkan said in a statement issued Monday following the vote. “Seattle can continue to innovate, invent, and grow – and we can continue to come together to build a more affordable, inclusive, and just future for all who call this great city home.” Durkan’s full statement is included at the bottom of this post.

Meanwhile, the smaller tax plan will be accompanied by a smaller housing and homelessness services spending plan including enough money to build an estimated 591 affordable units in five years, and around 15 million per year for services including rental subsidies, shelters, “innovative temporary housing,” and more than a million a year for “city-wide sanitation and garbage services such as but not limited to Seattle Public Utilities’ Clean Cities program” —

The approval Monday brought a victory for Lisa Herbold and Lorena Gonzalez, the legislative architects on the plan, and, maybe, some time to finally rest after a weekend of negotiating. At a meeting with Capitol Hill business representatives last week, the duo said that data and expert reports plus their own experiences seeing the streets of the city convinced them that more needs to be invested in addressing Seattle’s housing and homelessness problems. Herbold also said she expects King County and the state will add to Seattle’s effort with increased regional spending on the crisis. “I don’t feel like we’re doing this in a vacuum,” Herbold said Friday.

The legislation was born out of Seattle’s “Progressive Revenue Task Force.”

“The City of Seattle has an obligation to take care of those people who are suffering on our city’s streets,” Gonzalez said prior to Monday’s vote.

According to King County, there are more than 14,000 people living unsheltered here.

The compromise approval — even without a ban on so-called “sweeps” and far from the originally proposed $500 per employee mark, let alone Sawant’s bid for $1,000  — also yielded a major victory to the Socialist Alternative leader and activists calling for large companies to do more to address social issues in the cities in which they do business. “This will be a historic victory,” Sawant told CHS Saturday before she led about 200 protesters in a “March on Amazon.” “This will be seen by every city where Amazon is building towers. But also every city in the United States. Because every city is facing a housing and homelessness crisis.” Now, in five years, the fight in Seattle will begin again.

In the meantime, Amazon, Starbucks, and the other approximately 3% of Seattle businesses that will be dinged in the process have some time to start saving up. The new tax will take effect in 2019.

UPDATE 9:00 PM: Mayor Jenny Durkan issued this lengthy update following the vote:

“Seattle’s unprecedented growth has come with significant challenges. From the beginning of this important debate, my priority was to find the right balance of meaningful progress on our affordability and homelessness crisis while protecting good, family-wage jobs. I heard from thousands of constituents, hundreds of businesses of all sizes, dozens of unions, and advocates, and we all shared the same goals: maintain a strong economy, help the thousands of people experiencing homelessness, and make Seattle affordable for residents, artists, and businesses of all sizes.

“Over these past few weeks, we saw what happens when we come together, sit down together, and work together – we can find common ground and get things done. And have no doubt – it was not easy. This was a tough debate in our City. There are a lot of strong passions and genuine policy differences between friends, neighbors, businesses, unions, and Councilmembers. But we have to find ways to come together to take action on our toughest problems.

“I am grateful for all the Seattle residents who took the time to make their voices heard on this important issue because they care so much about the future of this City we all love.

“This legislation will help us address our homelessness crisis without jeopardizing critical jobs. Because this ordinance represents a true shared solution, and because it lifts up those who have been left behind while also ensuring accountability and transparency, I plan to sign this legislation into law.

“Looking ahead, I will be taking urgent action to move people off our streets and into safer places and to clean up garbage, needles and waste from our parks and communities. At the same time, I want to create more accountability and transparency with taxpayer dollars. We will also continue to work towards a regional solution to homelessness because Seattle cannot go it alone.

“I believe in my bones that our City will continue to be the place that invents the future, and continue to be the most exciting and innovative city anywhere. Seattle can continue to innovate, invent, and grow – and we can continue to come together to build a more affordable, inclusive, and just future for all who call this great City home.”


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22 thoughts on “Seattle approves plan for ‘reasonable’ tax on its largest businesses to help pay for housing, homelessness — UPDATE

  1. What a disgusting display of cowardice this was. We’re talking about a proposal to add a paltry 25 cents per employee per hour on gigantic businesses’ payrolls, and City Council couldn’t do it, instead caving to a tiny minority of powerful constituents adn cutting the result from 18.5% of the $400M needed to 12%.

    • I think this will be a major disincentive for creating jobs and will ultimately end up hurting Seattle much more than getting back at Amazon. I would really like to know what Seattle council has done with the previous 190 million dollars of taxpayer money that was allocated toward helping the homeless.

    • I would agree with you, Phil, IF there was any evidence at all that the City would spend the additional money wisely and effectively. But the track record is not good. $200 million on a King County-wide basis should be sufficient to address homeless issues.

    • One more point…..it was not a “tiny minority” which made the difference. There has been a groundswell of public opinion against the head tax among Seattleites in general.

      • We keep going around in circles – no doubt an income tax would be better, but Seattle can’t do that. Property tax can’t pay for everything. So we end up with this.

      • Yes, it’s true, we can’t an income tax– yet. But what we’ve seen is that the longer we keep moving the line in the sand, the more regressive tax increases we see that don’t impact everyone fairly. The city council will keep piling on property tax levies until we hit a breaking point, and we have a crisis. Every one of these incremental taxes is just kicking the can down the road. I’d like to see the City Council devoting as much time to lobbying other cities and counties in WA to convincing their residents why we need an income tax, as they do in piling on more wasteful city of Seattle taxes that never seem to produce results.

    • Phil, I think that new study (calling for massive increase in funding) is misleading. Even if it was feasible to build 14,000 new units, that would not make a significant difference in the homeless population. Why? Because most of the new units would be occupied by middle class people who could pay affordable rent, not by homeless people, many of whom have addictions and mental health issues that would preclude them from working and paying rent. Even if some of them were housed in the new units, who exactly would pay the rent?

  2. I still think that the head tax of whatever amount is a bad idea. I suspect that every year the collective will be asked for more, because no amount of money is going to be enough to address, let alone solve, the myriad problems associated with homelessness. At some point, there need to be limits on the support.

    • I 100% agree. A head tax is a job killer. This is not just my opinion, Chicago used to have a head tax but eliminated it in 2014 per the Mayor’s urging! Mayor Rahm Emanuel (D) told the Chicago Tribune the “head tax” was a job killer, adding that “eliminating the head tax is the right thing to do for businesses big and small, and it’s the right thing to do to secure Chicago’s future.”

      But of course Seattle is different? If a liberal Democrat like Rahm Emmanuel is saying no to a head tax, what is wrong with our city? Dump more money into people/problems that add no value to the city. We can’t even ask them to pick up after themselves because that would be inhumane(?) but we can ask tax payers to continuously foot the bill for the homeless. Forget it. When the homeless population show some gratefulness and care for the community they are invading, I might think it would be a good idea to help them out.

    • I don’t believe this will present a significant disincentive. But if it does, that will be a disincentive for mid-to-large-sized businesses to grow large enough to qualify for the tax. If so, great! More smaller businesses and more competition!

      Does anyone really think any giant business is likely to stop operating here because instead of paying $15-100 per hour for labor they must pay $15.20-$100.20 per hour for labor? Get real.

      • No, Phil. It will not stop companies from operating. It is likely they will move their business elsewhere. This impacts hundreds of companies and you minimize it by stating 26 cents/hour. Many cannot support spending tens of thousands a month and maintain a competitive advantage.

        Major companies are the backbone of a cities economy which support small businesses that cater to the employee bases. You send jobs elsewhere, you send the workers elsewhere and mom and pop shops lose their customer base. You may want a stagnate/stalled economy – I don’t.

        The majority of Seattleites do not want a head tax. City Council needs a full replacement.

  3. Yet another example of Sawant’s hypocrisy! I cannot wait for the opportunity to vote her out.

    “As an aside, Bagshaw chastised Sawant at a morning briefing, accusing she and her staff of using city copiers to print out her “Tax Amazon” signs, saying she found it inappropriate. Sawant did not deny it and said she believes it is OK to use taxpayer-funded equipment for her ‘movement.’ ”

    https://www.king5.com/article/news/local/seattle/seattle-city-council-passes-smaller-head-tax-with-end-date/281-551930021

  4. Have any long term studies been done on the effects of rapid corporate growth in and on a city and how to best mitigate? There are so many moving parts to this it’s difficult to know the best way forward. But regardless of where one falls on the shrunken head tax, no one can deny that Amazon has had a huge impact on Seattle. Some would say more positive, some more negative…but it has changed this city. My ideal would be a fee or taxation system that’s in place before a corporation explodes so we aren’t playing catch up the next time. For obvious reasons we’re laser focused on housing. But we need more schools, safer bike/walk routes and dog parks so kids aren’t stepping in piles and rivets at the local playgrounds.

    • What is clear is that Amazon is not some benevolent life form – it’s happy to switch off growth as needed to make Seattle support its needs. Jeff lives over in meidina..

      • Name another large business that’s a “benevolent life form”? Name another city in King County, and there are several affluent ones, that are lining up to impose a similar tax? For that matter, why isn’t King County getting behind a head tax for all businesses in the county? You know why. Because it won’t get any support county-wide, and other surrounding cities know if they start collecting tax money for homeless services they’ll attract homeless people from Seattle. Not to mention other cities are more than happy to see if Seattle will chase jobs their way when the big employers pick up stakes. Tax-happy people don’t seem to get it– Seattle has no leverage in this fight. The only way they would is if the Eastside got behind it, and they won’t. Hell, they won’t even imposes a plastic ban. Just like always, Seattle shoulders most of the burden.

  5. Here is another example of professional activist types being the real TINY MINORITY and the good and generous people of Seattle standing up and saying “NO HEAD TAX” loud and clear. But the idiot city council and wishy-washy mayor caved to the loud and tiny minority of Sawant-professional activists and passed a so-called compromise.

    Besides being another waste of tax money, the concept of imposing a head tax while allowing squatters to keep openly injecting heroin and meth is appalling and totally unacceptable. It’s pathetic really. The associated property crime is rampant, and its going to get worse before it gets better thanks to our city’s snow-flake attitude and enabling. The urine and feces and syringes are not acceptable. The out of state addicts are not acceptable. And the tax is going to put further pressure on low-margin grocery stores.

    We need to acknowledge and respond to the heroin and meth problem, not keep pretending all these people were local and suddenly got priced out of a studio apartment and are suddenly homeless.

    When King County opens their heroin injection sites – against the will of voters- fasten your seatbelt. Maybe you’ve seen Vancouver’s downtown eastside, but add American-style gang/gun violence to the equation as dealers compete for heroin sales.

    • Holy sensationalist claims, Batman!

      TINY MINORITY

      I hear this every year or two. Yet when election comes, you sensationalists are but a ripple in the ocean. Let’s wait and see next election.

      Besides being another waste of tax money, the concept of imposing a head tax while allowing squatters to keep openly injecting heroin and meth is appalling and totally unacceptable.

      Well, solutions to the problem keep getting proposed (homeless shelters/housing, Urban rest stops, mental treatment centers, addiction services, etc), but are constantly shot down by a very vocal minority of Next Door-esque rabble rousers. So until we can get around that issue, we are just attempting to mitigate a full blown epidemic. Not to mention, there’s zero help at the national level, despite Congress actually contributing to the problem (tax cuts on the wealthy, Ensuring Patient Access and Effective Drug Enforcement Act of 2016, etc).

      We need to acknowledge and respond to the heroin and meth problem, not keep pretending all these people were local and suddenly got priced out of a studio apartment and are suddenly homeless.

      Except a survey about a year ago shows that 70% were living in Seattle or King County when they became homeless. Something like 15% were homeless out of state or country before they moved here. So your claim is pretty pathetic, unless you have source to back yours up?

      When King County opens their heroin injection sites – against the will of voters- fasten your seatbelt. Maybe you’ve seen Vancouver’s downtown eastside, but add American-style gang/gun violence to the equation as dealers compete for heroin sales.

      Vancouver’s safe injection site (Insite) is a pilot project and came to be well before the current fentanyl crisis. It was like using a garden hose to put out a house engulfed in flames. Not to mention, that area was not a good one before the facility opened up…remember? The results on this particular site are inconclusive, due to Stephen Harper’s resistance to providing legitimate studies. However, multiple reports have been published leaning positive for the results of Insite.

      The naysayers for Vancouver conveniently gloss over the long operating safe injection sites that exist all over Europe and a few in Australia. One recently opened up in Toronto and SF and NYC are due to open up their own.

      So again, present your facts and sources that show that safe injection sites work. And please don’t post the report by the Journal of Global Drug Policy and Practice, which is funded by the US Department of Justice and not recognized as a peer reviewed journal nor a scientific journal. Until then, return to the putrid swamp that is the MyNorthwest comments section.

  6. Still waiting for the majority to say no to the Airbnb tax which will take 15% gross from small amount people make from renting their bedrooms and trying to survive . Oh – that was ok, it wasn’t Amazon…

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