Seattle Poised to Repeal Tax On Amazon and Large Employers

(Bloomberg) -- Under pressure from businesses and homeowners, the Seattle City Council is poised to repeal a tax on large employers like Amazon.com Inc. less than a month after it passed the tax unanimously.

The council said it will hold a vote Tuesday and signaled it would reverse its earlier move. The tax of $275 per employee — called a head tax — was expected to raise almost $50 million a year for homeless services and affordable housing, and the ensuing debate exposed a schism in the city over who's responsible for the city's swelling homeless population. Amazon and other major employers in the city had vocally opposed the tax, and the e-commerce giant, which is usually quiet about hometown politics, said it was pausing some development while the council considered the tax.

The council's vote to tax the retailer was a rare instance of a city standing up to Amazon and demanding it fork over a portion of its wealth. But even after the council passed the tax, the debate persisted. Some Seattlites felt that the largest companies should shoulder some responsibility for the city's rising home prices, but a growing number expressed skepticism that the city —and the council in particular— would be good shepherds of the new funding.

The business community, including grocers and developers, donated $285,000 to gather enough signatures to put a repeal of the tax on the November ballot. Amazon gave $25,000 to the effort. A counter effort, sponsored by the Service Employees International Union, raised about $70,000 to convince voters not to sign the petition. The two sides have fanned out across the city, at transit stops, parks, and grocery stores, trying to build their constituencies. Local publications reported the business community gathered enough signatures to assure the measure would be on the ballot.

The council didn't want to see the issue go to the voters, and on Monday, Council President Bruce Harrell called a special meeting for Tuesday to vote on the repeal. The mayor, along with seven of the nine council members—including the original sponsors of the legislation—issued a statement saying they were moving ahead with a vote to reverse their earlier vote. “It is clear that the ordinance will lead to a prolonged, expensive political fight over the next five months that will do nothing to tackle our urgent housing and homelessness crisis,” the statement said. 

To contact the editor responsible for this story: Emily Biuso at ebiuso@bloomberg.net, Jillian Ward

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