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Threat of Amazon construction halt throws proposed Seattle business tax for a loop

With reporting by SCC Insight

A day after a lone May Day protester was arrested for trying to toss a rock through the Amazon Spheres, the world’s third fourth most valuable company returned fire Wednesday announcing it would halt planning on its new “Block 18” commercial office tower and considering subleasing their space in the Rainier Square building, pending the Seattle City Council’s decision on whether to enact a proposed new tax on big businesses that would cost the company $20 million annually.

The move set off a firestorm of responses from politicians. The Seattle Times quotes a spokesperson for Governor Jay Inslee saying that Amazon had raised the topic of the tax with the governor, and that he hopes there is room for compromise. The newspaper also quotes Mayor Jenny Durkan, who recently sent a letter to the City Council expressing her concerns with the proposed tax. Durkan expressed concerns about the jobs impact if Amazon follows through, and pledging to work with the council and business and labor leaders to strike a deal.

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Amazon’s maneuvering came just before the council was scheduled to hold a committee hearing Wednesday to discuss issues and possible amendments related to the tax legislation and the accompanying spending plan. The tense session included District 3 representative Kshama Sawant characterizing Amazon’s move as “extortion.” The council member previously held a “tax Amazon” town hall to rally support for the legislation including a protest outside Amazon’s headquarters.

Council member Sally Bagshaw said she was concerned about the impact on jobs. “We need to find out if the jobs are really going to be impacted and I’m interested in the construction group,” Bagshaw said. “The building and construction trades have sent us a letter as well, saying this is going to impact some of their jobs, so we need to know about that.”

Later Wednesday afternoon, the four council members sponsoring the tax legislation — Lorena Gonzalez, Lisa Herbold, Teresa Mosqueda and Mike O’Brien — issued a joint press release in response to Amazon. In it they said, “This was never a proposal targeting one company, but Amazon made the conversation about them when they expressed their intentions to pause construction on their new office tower pending a vote on our Progressive Tax on Business.”

In the same press release they quote Amazon’s recent earnings reports and note that “Seattle has become the nation’s biggest company town.”

Amazon alone will pay about 26% of the total revenues raised by the new tax.

Wednesday’s rough day for the “Amazon tax” finished with a contentious “town hall” held in Ballard to solicit community feedback on the proposed new tax on large businesses hosted by O’Brien whose district includes Ballard.

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41 thoughts on “Threat of Amazon construction halt throws proposed Seattle business tax for a loop” -- All CHS Comments are held for moderation before publishing

  1. >Kshama Sawant characterizing Amazon’s move as “extortion.”
    isn’t she the one demanding money?

  2. This could end up as the biggest “We told you” in recent Seattle history– maybe even the one that finally knocks some sense into the deluded nutcases on the City Council. I’m not a huge fan of Amazon for other reasons, but in this case: good for them.

  3. BTW, hasn’t it been reported it was actually a woman who hurled the rock at the Amazon spheres? Gary Horcher needs to update his tweet.

  4. Everyone loves to complain about all the taxes in Seattle, let me ask you, how would you pay for the needed cleanups and programs?

    If you cancel them, your home prices/city tank.
    If you fund them, you’re a socialist.

    If you fund them through regressive taxes, you’re anti-business.

    So what about a state tax? Well the Fortune 500s lobby very successfully against that.

    Listen, I’m not a fan of continually adding more and more taxes, I would love getting rid of them all and funding our state’s budget through the normal way: a state tax.

    You can’t say no state tax AND no regressive tax. That’s a childish answer that doesn’t solve any problems. There needs to be a compromise between the corporations and the needs of the state.

    At some point you have to accept there are costs that exist, and we have to pay for them.

  5. I think the hostility on this issue is that the city has spent a billion dollars on this issue in the last 10 years and it just gets worse. At some point it seems reasonable to cut them off. I personally would be a fan of just ending all funding if it doesn’t help.

  6. This is not just about Amazon, There are many local businesses that would have to have to pay this exorbitant tax. Good for Amazon on this issue,


    Seriously, Amazon has contributed to the city’s growth (and the corresponding growing pains) – if they are willing to pay their employees 6 figure salaries but not a tiny percentage more to help with the problems directly tied to their growth (overcrowding, traffic, homelessness), F them, let’s get more rocks.

  8. It’s not Amazon’s fault that there is no income tax in this state. It’s not Amazon’s fault that the nearly $200 million dollars King County invested in homelessness solutions didn’t help or improve the situation. Before we add taxes to anyone or any organization, it seems responsible to follow the advice of two consultants hired by the city several years ago. They separately came to the same conclusion, we’re spending enough to address this crisis, we just aren’t spending it in the proper areas. No accountability. Before buying a new car, perhaps we should fix the one we have.

  9. If you have any leads to starting a small business that generates $20M in gross receipts, please pass the knowledge along.

    This tax has a very high threshold.

  10. You’re conveniently leaving out that both Seattle and Washington state are experiencing record revenues Mark.

  11. If Amazon’s employees are averaging over 6-figure salaries and they’re not willing to contribute any of it to their communities, we don’t need them here. For years we’ve had highly paid tech workers moving to Seattle from the Bay area. They paid a state income tax in California and higher housing costs. And lots of those people renting $2500-3000 apartments in new bldgs. are voting for every increased tax levy, knowing they’re still somewhat insulated from the increase to a much greater extent than homeowners, because they don’t pay property taxes. Homeowners are bearing the disproportionate brunt of every tax increase. A lot more of them have been here for a long time and aren’t the ones pulling down the big $$ like the recent arrivals are. And don’t expect any other cities around Seattle to enact head taxes either. All you’ll do is push jobs out of Seattle.

    • @Jim98122x:

      And lots of those people renting $2500-3000 apartments in new bldgs. are voting for every increased tax levy, knowing they’re still somewhat insulated from the increase to a much greater extent than homeowners, because they don’t pay property taxes. Homeowners are bearing the disproportionate brunt of every tax increase.

      Ummmm…any landlord, in this rental boom, that is not passing 100% of the cost of property tax to their tenants is either extremely generous or extremely stupid.

  12. In large part I’m with Mark and Jim on this but do want more education on the fine points. In another blog the fact that high grossing/low profit margin companies (Bartells was listed) could feel heavy brunt of this is concerning. Supposedly this tax will be fleshed out in the near future, but what impact will it have in it’s current state? I’d really like to get more data on which local companies (besides Amazon) will be paying this tax. Income Tax seems a no-brainer long term fix but in the meantime, shifting away from regressive taxation seems fair. Side note re: State income tax: Of the top ten states with the most regressive taxation, the top 4 do not have state income tax. And WA is at the top of this list.

    • And all the folks who bought at the top of the market will immediately lose a ton of equity. The potential ripples from this mess could really be detrimental to the city.

  13. How about we send a $10K tax bill to every person living in Sawant’s district? Doubt the corporations would rally against that and all those living there will be doing their part to better those who need the most help. It’s just a simple equality tax, since you don’t feel you pay enough.

  14. How bout we not? Savant’s district doesn’t include only renters in posh Capitol Hill apartment buildings. There are lots of us middle income (and slipping) homeowners in the Central District that don’t support her taxaholic ways, and have been sinking under the weight of these incessant tax levy increases for several years. We just seem to be outnumbered by people who seemingly aren’t feeling too much pain under these taxes, for whatever reasons.

  15. Say what you want about amazon with out there thousands of employees living here making good money we wouldn’t see so many small businesses like cafes and shops doing so well. I don’t care what anyone says the wait times at local places around the hill are long and that’s not a bad thing. It’s great for the owners! I’ve lived on Capitol Hill 18 years and can remember many places failing because there were not people eating out. If Amazon goes so do the patrons.

  16. I’d like to be convinced that the megamillions that taxpayers already contribute to homeless issues are well spent before adding another tax.
    Don’t want to kill the goose that lays the golden egg

  17. I would not be sorry if Amazon permanently pulls back on their expansion in Seattle. They have already had an enormous negative impact on our city. Enough is enough.

    • Such as?
      Jobs, economic growth, increases in small business due to new folks coming in. Sure, traffic sucks, but lost how it’s been horrible for the greater community.

  18. Then rally your neighbors and vote her out. She’s eminently defeatable. On a daily basis, she provides an opponent with critically damaging campaign material. (Oh, how she must wish yesterday never happened.)

  19. Mark, there are other businesses Seattle besides Amazon that have at least 20 million in Gross Receipts – Ethan Stowell and Tom Douglas restaurant groups are two that come to mind. Restaurants have small profit margins and this tax could kill them.

  20. This is for those that say Amazon can afford it. Do you really think that Amazon wants to pay millions of dollars for this tax when all the millions that already have been spent have only made things worse? I am a fifty year old resident of Seattle, and I have never seen the homeless population that has left so much trash, human excrement, used needles, and other debris all over our public spaces. Enough is enough. Stop enabling this behavior, and practice some tough love. There are some homeless people that truly need and want help, and I am glad to help, but for the strung out drug addicts, I have run out of sympathy.

  21. Much of the Seattle population is suffering from compassion fatigue and tax increase fatigue.

    Blind compassion is not working… that obvious to anyone who lives or visits here.

    Increasing taxes to support the same old thing (even when it is tweaked slightly) is not working. Again, obvious.

    To say that we need to spend more doing more of the same is as hollow as the Right’s belief in trickle down economics. They want to believe it because it fits into their world model, so it is “true”.

    compassion + $$$ success. It can, but not with the current system we have in place. New system please… designed from the ground up around science, data, ROI, defined outcomes, metrics, and accountability. Pouring money into a system where the qualifications of the providers are simply “they have been doing this for years” and “they have largess of compassion” is not a system designed around success.

    Anther point, he median salary of a City of Seattle worker is $100,000. The city has ~10,000 employees so they are a large employer. If Amazon’s compensation to their employees is a talking point in this “destruction” of Seattle then the city’s should be identified as a culpable party too.

  22. Sarah, only 3 percent of Seattle businesses – the largest, based on revenue – would pay.

    Of course, if this passes, it will set a precedent that monopolist oligarchs like Bezos are terrified of. Cities and their residents asking for the billionaires to pay their share and stop shouldering the costs of running our cities and states onto the little people.

  23. It is in fact partly Amazon’s fault there is no state income tax since Bezos along with a bunch of other bazillionaires spent a lot of money to defeat the 2010 measure.

    With the breathless defenses of Amazon and its kind, one can only wonder if there aren’t at least a few paid shills posting here.

    The rest of you are giving away your labor for free to some of the richest people on the planet.

  24. Landlords can’t unilaterally just pass along every tax increase if it make them non-competitive. They still can only charge what the market will bear. Furthermore, the larger the bldg, the more watered down the full effect of that tax increase is on the entire bldg. Even if the landlord can successfully pass on the entire increase, the property tax is a much smaller % of the tenant’s rent as a whole when there are so many other amenities contributing costs to the rent.. Homeowners see a much more direct impact of every levy on their bottom line.

  25. I’m with Jim98122x and other homeowners who probably saved for years to buy their homes on Capitol Hill, Madison Valley, Madrona or the CD. They pay more than their fair share of taxes that fund public services that are now inadequate because of unchecked growth. Homeowners can barely hang on while armies of modestly paid workers are pushed 40 miles north and south to find affordable rents and well paid new resident renters shrug and show their selfish youthful attitudes: longterm residents, the NIMBYs, old farts and alarmists, need to move the F on because, well, that’s life and it’s not fair.

    Amazon can certainly pay more in taxes, and 26% of the total sounds about right. Bezos has proven to not give much of a damn about the general public other than as consumers; he seems to only care about Amazon campuses and canvasing the world for ever more “fulfillment center” worker bees.

  26. Whether or not Amazon can “afford” it is besides the point. Our city’s budget is ballooning, taxes are going up, we pass levy and after levy and yet things continue to get worse. The city is proving it cannot manage funds to drive results. Even with Move Seattle, the nearly billion dollar transportation levy we passed for transportation, they’re starting to cut projects because the city’s cost estimates were so far off.

    For homelessness, an independent report the city commissioned from consultants a couple years ago said that we were spending enough money, just not in the right ways.

    The city has a duty to show us how what results are being driven the money we are spending now. How many shelter beds, the occupancy rate, how many of those people are getting into permanent housing, etc. Then let’s take the programs that are working and evaluate incremental investment in those, and how much impact we could drive with that. Fully defund the programs that aren’t working or can’t show results. Let’s agree what metrics we’ll evaluate success by and measure ourselves. Instead, we get Kshama Sawant with a bullhorn screaming “tax the rich!” on the lawn of our largest employer, with vague plans about how yet more millions will be used.

    Bottom line, the city has almost no credibility that it can successfully manage the funds we currently spend, let alone new ones, to deal with this and actually get people housed. That’s why people are against this tax. The notion that “you can afford it so shut up and pay, or else you’re greed incarnate” is highly unproductive, and could result in thousands of jobs leaving the city for Eastside or elsewhere.

  27. It’s interesting that people think all of those six-figure earners aren’t contributing to Seattle. Er, they pay every tax that all of you pay, and since they earn more, they’re literally contributing more revenue to fund services.

    Whether that offsets the negative (i.e. the very real upward pressure on housing) would require some math, but it’s equally amusing to think that the loss of that revenue (i.e. Amazon leaving altogether) would be a net positive. The short-term impact would be catastrophic for all of those relying on our current tax base for funding, and the short-term fix for a drop in funding is to actually increase taxes.

    So kick Amazon out and, in the short term, you’d see rapid increases in taxes to offset the losses in revenue. Good bye transit funding. Good bye homeless funding. Good by needle sharing funding. All of those kinds of things would be cut first.

    It might stabilize, and you might see rents start to decrease. And it might end up awesome. Or it’d end up Detroit. But I’m not sure the solution to helping the most vulnerable in the city is to poke at the largest source of revenue helping those vulnerable people, at least before you figure out how to solve their issues.

  28. Actually, no they don’t pay every tax I pay, not to the extent I do. The bigger the fancy building the more watered down the impact of these never-ending property tax levies is on them. And some of the buildings got tax abatements in exchange for having contributed to various city programs. And the whole point of regressive taxation is in fact that it impacts lower-income people harder than higher-income, because a higher % of their income goes to necessities that don’t increase linearly as income goes up. And finally, for the highest earning ones, they max out their social security tax and quit paying it at some earnings level that most of us never hit.

    Look, I’m not in favor of kicking Amazon or any big local business out. I’m in favor of a fair state income tax that applies to everyone, so we can slow these never-ending regressive property tax levies. And raise money to fight homelessness statewide, not just collected in Seattle or King County. And I’m NOT in favor of stupid head-tax schemes that won’t work, because they miss the point that Amazon, like any big company, has options. They can move out of the city, across the lake, or out of state. Don’t think they won’t. They’ve already figured out how to outsource lots of their jobs and cause a race to the bottom of local labor rates. (Trust me, I know firsthand what that’s like). Decamping to a cheaper business locale would be a cakewalk.

  29. Thank you, Jim, for pointing out that renters pay a lower percentage of their income (compared to homeowners) when rents go up due to property tax increases. Renters tend to deny this reality.