Published: Tue, May 15, 2018
Money | By Armando Alvarado

City council passes scaled-down head tax

City council passes scaled-down head tax

A controversial proposal that will tax big businesses in Seattle to alleviate the city's homelessness and affordable housing problems was approved Monday.

The council voted 9-0 to require large Seattle businesses to pay $275 per employee in taxes for housing and homeless services. The tax will amount to $275 a year per full-time employee in Seattle.

The tax also would hit such Seattle-based stalwarts as coffee retailer Starbucks and department store chain Nordstrom, as well as California-based tech giants like Apple, Google and Facebook that have enough of a presence in Seattle that they would be subject to the new levy.

The move by Amazon to create HQ2 - a second headquarters elsewhere - has stoked fears that Seattle's liberal politics will turn off the company.

They voted as people packed the meeting, holding signs saying "People before profits" and chanting "housing is a human right".

City Council members worked over the weekend to reach a compromise with Seattle Mayor Jenny Durkan, who threatened to veto the original suggestion of $500 per employee, proposing her own plan calling for half that amount. "Because every city is facing a housing and homelessness crisis". The city council would need to review the tax, which kicks in next year, after five years if the city wants to extend it. "The city does not have a revenue problem - it has a spending efficiency problem". "So you're either well-off and hungry or homeless and well fed".

John Boufford with the International Union of Painters and Allied Trades said he didn't understand rhetoric against Amazon, which he noted provides good jobs for thousands of people.

The original bill was sponsored by four council members: Gonzalez, Teresa Mosqueda, Lisa Herbold, and Mike O'Brien.

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"As a union rep, we meet with our employers to discuss our problems and come up with solutions jointly", Bufford said.

If council members vote as they did to advance the tax, the mayor would then have to decide on whether to sign it into law, let it become law or veto it.

Some opponents of the measure called for greater accountability on how funds addressing homelessness are spent. A point-in-time count past year tallied more than 11,600 homeless people in King County.

"The spending keeps going up and we're not seeing results".

Businesses and others who say the tax is misguided and potentially harmful question whether the city is effectively using the tens of millions of dollars it already spends on homelessness each year. Previous year 169 homeless people died in the city where winter temperatures can fall to minus 7 degrees. The median price for a house is now $777,000. The vote comes after weeks of intense debate over what responsibility large employers like Inc. have for the growing number of people living on the city's streets. It would raise about $75 million a year for homeless services and affordable housing. That figure could quickly rise when the funding mechanism would transition to a payroll tax. Separately, the company has committed more than $40 million to two groups: the Mary's Place shelters for homeless families, including space in company buildings; and the FareStart non-profit organization for homeless and disadvantaged men, women, and kids, including space and equipment for FareStart restaurants.

He said he was anxious about the effect the larger tax would have had on jobs in part because of concern over how the money would be spent. He said the city's revenue growth has outpaced its population increase.

Scruggs reported from Seattle.

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