Taxing in the Name Of: Seattle “Head Tax” Approved

Taxing in the Name Of: Seattle "Head Tax" Approved

Seattle City Council unanimously approved a measure to tax the largest companies in the city, ending weeks of debate and negotiations with Mayor Jenny Durkin. Dubbed the “Seattle head tax”, the measure was touted to raise funds, combat homelessness, and build affordable housing by instituting a per-employee tax on companies such as Starbucks and Amazon, among others. With no income tax available to the city, new revenue streams have been a hotly debated topic.

CNN Money:

The Seattle City Council passed it unanimously in a 9-0 vote.

The final package, however, is almost half the size of the original proposal, which never garnered a veto-proof majority on the council. It was publicly opposed by Amazon — the city’s largest private sector employer — and 131 other businesses.

The newly passed ordinance, which takes effect in January 2019, will impose a “head tax” on the city’s highest grossing businesses. The tax will amount to $275 a year per full-time employee in Seattle. It would raise an estimated $44.7 million a year and expire after five years, according to the Council.
That’s down from the $75 million a year the original proposal would have generated by imposing a $540 head tax per employee for the next few years, after which it would be converted to a 0.7% payroll tax.
Related: For Amazon HQ2 hopefuls, Seattle serves as a cautionary tale

The only companies affected by the new ordinance would be those generating $20 million or more of annual revenue in the city. That’s roughly 3% of businesses in Seattle, or 585 employers, according to the Council’s estimates.

Roughly 60% of the revenue raised would go to building affordable housing, and 40% will be put toward emergency services for the homeless, Councilmember Lorena González said in the Council’s public meeting Monday.

Seattle Mayor Jenny Durkan, who threatened to veto the original $540 head tax out of concern that it could cost the city good jobs, said Monday evening she would sign the new compromise deal into law.
“This legislation will help us address our homelessness crisis without jeopardizing critical jobs,” Durkan said in a statement.

Those largest companies, however, are not being quiet in their opposition to the measure.

HearldNet.com:

Amazon, Starbucks and business groups sharply criticized the council’s decision after Monday’s vote. They called it a tax on jobs and questioned whether city officials were spending current resources effectively. One state Republican leader said he would seek legislation next year to make clear that a city tax on employees, wages or hours is illegal.

Seattle-based Starbucks had harsh words for its hometown leaders. It accused the city of spending without accountability while ignoring that hundreds of children sleep outside.

“If they cannot provide a warm meal and safe bed to a 5-year-old child, no one believes they will be able to make housing affordable or address opiate addiction,” Starbucks’ John Kelly said in a statement.

Adding to the drama was the pausing of construction on a downtown facility by Amazon during the Seattle head tax debate which the retail giant now says will resume, but with a warning.
Fortune:

However, the version of the tax that the City Council agreed to on Monday will be far less onerous than the draft that led Amazon to suspend construction on a new office tower in a not-so-subtle threat over providing further employment in Seattle.

“We are disappointed by today’s City Council decision to introduce a tax on jobs,” Amazon said in a statement. “While we have resumed construction planning for Block 18, we remain very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here.”

The big name companies get the spotlight, but the debate over growing mega-companies and their effect on housing in the areas they are based in is both old and growing. Supporters are not shy about their intentions for taxing large companies for social causes, such as to be found at Common Dreams:

Overcoming weeks of extortionist threats and other forms of “corporate bullying” from the world’s largest retailer, Seattle’s City Council on Monday unanimously approved a new tax on Amazon—which paid nothing in federal income taxes last year—and other major companies in an effort to provide essential services for the homeless and combat the local housing crisis.

“As long as big business controls the wealth in society, and controls what is built and where…they will create a race to the bottom around the world.”
—Kshama Sawant, Seattle City Councilmember

Noting that the so-called “head tax” is quite modest relative to Amazon’s annual revenue and the pay of its CEO Jeff Bezos—the world’s richest man—socialist Seattle City Council member Kshama Sawant argued on Monday that “even a smaller tax is a huge victory,” given the “Goliath-like clout of Amazon.” A far more progressive and bold approach is possible, Sawant urged, if politicians refuse to limit “themselves to what’s acceptable to big biz.”

In total, the tax is expected to raise around $47 million a year, $13 million of which would come from Amazon, the city’s largest employer. Warren Gunnels, policy director for Sen. Bernie Sanders (I-Vt.), called Monday’s vote a “huge victory” and noted that yearly revenue from the new tax on Amazon will be roughly equivalent to what Bezos makes in an hour.

Other companies that will be hit by the tax are Starbucks, Apple, Google, and Nordstrom.

Despite the fact that the measure passed by the Seattle city council on Monday is significantly smaller than the original $75 million a year tax proposal, Amazon continued its “howls of protest” in a statement on Monday, decrying the new tax as “disappointing” and “anti-business.”

Fortune:

Seattle has a serious homelessness problem that has been exacerbated by the growth in high-paying jobs there, thanks to big employers such as Amazon, Microsoft and Boeing.

So, at the end of April, the Seattle City Council released draft legislation that would force companies with revenues of over $20 million in the city to pay 26 cents for each hour worked by a Seattle-based employee, or roughly $540 per head per year. This “head tax” was to apply over 2019 and 2020, generating $86 million a year for social programs, before turning into a 0.7% payroll tax. (The annual proceeds of the tax were originally calculated at $75 million before the council revised its estimates.)

However, with Mayor Jenny Durkan threatening to veto the tax because she was concerned about its impact on employment, the measure had to be watered down to pass.

Amazon addressed such criticism in its own statement:

“We are disappointed by today’s City Council decision to introduce a tax on jobs. While we have resumed construction planning for Block 18, we remain very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here. City of Seattle revenues have grown dramatically from $2.8 billion in 2010 to $4.2 billion in 2017, and they will be even higher in 2018. This revenue increase far outpaces the Seattle population increase over the same time period. The city does not have a revenue problem – it has a spending efficiency problem. We are highly uncertain whether the city council’s anti-business positions or its spending inefficiency will change for the better.”

Still others think the city might be overreaching here, and some have challenged the notion that only the big companies will be affected:

King5:

The debate has most often focused on Amazon, but there are roughly 600 businesses that will be affected, some more than others. One of those is the iconic Dick’s Drive-In.

“That’s what’s really frustrating, this isn’t about Amazon at all,” said Saul Spady, whose grandfather founded Dick’s back in 1954. “This is a tax on high-volume, low-margin businesses, like restaurants, and that’s where it’s going to put the most pain. And it’s making restaurants like Dick’s Drive-ins think really strongly about do we make our workforce more efficient, do we give less money to charity, or maybe we just don’t be a business in Seattle.”

For some, Dick’s Drive-In is as much Seattle as the Space Needle, or Starbucks. It’s been here longer than both but now must face the fact of doing business in a city that’s rapidly changing.

Meanwhile, restaurateur Ethan Stowell is primed to open his newest venture in fine dining, Cortina. It’s unclear whether the head tax will affect him directly, but he’ll be paying for it one way or another.

“There’s dozens of purveyors that we buy from that all have to pay it, and they have to raise their prices,” said Stowell. “If milk costs me x amount of dollars and now it goes up, my percentage is my percentage, I need to make sure I’m fiscally responsible with my business and they’re going to be reflected in the price.”

Like Dick’s, Stowell and other Seattle businesses have given back to their community but admits more could be done. The question is who spends that money the best.

“I’d be happy to write a check for homelessness. Am I happy to write a check to the city of Seattle for them to manage my money? Not super stoked about that,” Stowell said.

Activist might scoff at Amazon hinting at considering their future in Seattle, but in the background looms memories of a city and region that is still smarting from the loss of an iconic business not long ago.
ABC News from when it happened:

Boeing Co. stunned its hometown by announcing it is moving its headquarters out of Seattle, where the aircraft manufacturing giant was founded 85 years ago.

Chairman and Chief Executive Phil Condit said Wednesday Boeing is considering Chicago, Denver and Dallas-Fort Worth. It hopes to choose the site by early summer and have it running by fall.
Condit said the move is intended to save money and give the world’s No. 1 maker of passenger jets a headquarters central to its operations, now spread over 26 states.

The company’s huge jet manufacturing plants will remain in the Seattle area, as will much of its research and development work.

Condit said less than half the 1,000 employees working at its Seattle corporate center will be moved to the new headquarters. The others will be transferred to other departments or may be laid off, he said.
The announcement shocked community and labor leaders.
While the move might not have a major economic impact on Seattle, Mayor Paul Schell and Gov. Gary Locke publicly pleaded with Boeing to reconsider. “I will do all I can to help them change their minds,” Schell said.

“I am surprised and deeply sorry to see any part of the Boeing Co. leave Washington state,” Locke said. “While the bulk of the Boeing family remains with us, to lose the corporate leadership of this company leaves a void in our economic and cultural life.”

Is there a foreshadowing in Boeing’s move and the debate at hand with Amazon post Seattle head tax? Maybe, wrote Dominic Gates last year when Amazon HQ2 became an issue:

Some parallels to Amazon’s decision are clear, but there are important differences too.

For a start, the prize for the city that wins the Amazon contest will be much, much richer: It promises a $5 billion investment, as many as 50,000 high-paying jobs, an expectation of kindling more growth, and the immediate prestige of digital technology leadership.

In his 2001 announcement Condit named Chicago, Dallas and Denver as the leading contenders and invited proposals from each city. When Chicago came out on top a few months later, only a few hundred corporate jobs shifted from the Seattle area to a skyscraper in the Windy City. Boeing’s manufacturing sites were never part of the move.

At the time, Boeing employed 79,000 people in Washington state. By 2012, that figure had risen to 87,000.

The most significant difference in the two corporate maneuvers may be more psychological: Amazon is not “moving” its headquarters. It’s duplicating it.

That is significant because while Amazon hasn’t signaled dissatisfaction with Seattle, Boeing’s move betrayed a deep unease about the city.

***

There also was a suspicion that the corporate and political climate of Chicago — its more conservative, business-friendly bent; its expensive steakhouses where macho titans of industry could talk over cigars and scotch — would better suit the taste and personality of men like Boeing’s then-president, Harry Stonecipher.

From their airy perch in Chicago, Boeing’s leaders could — and did — make steely decisions about where to locate work or where to make layoffs at a safe remove from the people affected on the ground.

The impact of that detachment from Seattle is apparent today, when Boeing’s total employment in the state has sunk to 67,000.
The recent sharp decline is due partly to cyclical trends in the airplane industry but also to Boeing’s leadership moving work to other states to reduce costs.

Of course, if Amazon in 10 years has twin headquarters in Seattle and say, Boston, its leadership will have a similar psychological freedom. When deciding where to make their next big investment, they’ll be equally able to play one city off against the other in asking for incentives — and almost certainly will do so.

However the homeless, the hard-up for housing, and the Seattle head tax move forward one thing is for sure: life in the Pacific Northwest just got more expensive for big companies, both in taxes and in turmoil.

What say you? Login and Comment.


Senior Editor
Home Page Public Email Twitter 

Born and raised in West Virginia, Andrew has since lived and traveled around the world several times over. Though frequently writing about politics out of a sense of duty and love of country, most of the time he would prefer discussions on history, culture, occasionally nerding on aviation, and his amateur foodie tendencies. He can usually be found misspelling/misusing words on Twitter @four4thefire.

Please do be so kind as to share this post.
Share

97 thoughts on “Taxing in the Name Of: Seattle “Head Tax” Approved

  1. The goal is laudable. The citizens of Seattle will have to make sure the funds raised by this tax go to the intended use and not the general fund. Imagine the corporate outrage the minute a single cent of the extra revenue gets misused.

    I wonder if the root cause of homelessness is best solved this way. Is the problem just that poorer people can’t afford to live in Seattle city anymore? If so, is this really a problem government needs to tackle?

      Quote  Link

    Report

    • Two links:

      John Carlson is conservative (for Seattle).

      But is Seattle’s losing battle against homelessness really about money? There is $195 million spent by government at all levels per year on housing and homeless programs in Seattle-King County. The city spends nearly $63 million on the homeless, twice as much as it did five short years ago. And the results? A 44 percent spike in homelessness in just the past two years. Thirteen years ago, city and county leaders launched an unprecedented campaign to provide more housing, more services, more outreach, more counseling and more understanding to “end homelessness in 10 years.” That money – and a lot more – was spent and is still being spent, and homelessness has nearly tripled.

      Seattle, America’s 20th largest city, has the third highest homeless population in the country.

      Has anyone lost their job over this sorry performance? Has anyone apologized? How about reversing course and trying different approaches? No, no and no.

      Is this happening all over? No. University of Pennsylvania professor Dennis Culhane told The Weekly Standard’s Ethan Epstein that while homelessness is soaring in a select few cities (Seattle, Portland, San Francisco, Los Angeles, Washington, D.C.), it’s rising by only 1 percent nationally. Most of America is seeing a reduction in homelessness while the problem continues to worsen here.

      Also, this is a good set of interviews with the homeless people in Seattle.

      They are all so different. Some had great lives that they threw away. Some never had a fighting chance. Some want housing, desperately. Some don’t.

      There was one thing though, that almost all of them seemed to have in common: Almost without exception, they were products of rough childhoods; abuse, neglect, broken families, and tragedy.

      One woman told me how she was trying to create a ‘real home’ for her family. But then when she told me her story, about her mother’s addiction and homelessness, and her issues with her father, I realized she had no idea what a ‘real home’ even was. She was poking around in the dark, looking for some vague fairy tale they’d seen somewhere in a movie.

      We didn’t interview hundreds of homeless and then pick out the wildest, scariest stories to feature in the special. I bet we talked to 20 people in all, dived into their lives for a time, and then came back to find them weeks or months later. What you will see Thursday night is a random cross-section of who’s out there: A former machinist. A former cook. A former web designer. Criminals. Kids. A guy who became homeless a year ago. Another who became homeless in 1972.

        Quote  Link

      Report

      • Well, of course homelessness is increasing in cities, that’s where the people and services are. If you become homeless in a tiny Wyoming town, your best option is to move to a city.

        Homelessness IMO is being fed by a perfect storm of smaller, more fragmented families, and wage stagnation*.

        People both left right and center like to imagine there is some One Weird Trick to eradicating it, but there really isn’t. There are small ways to improve the situation and helped some of the easy cases like providing housing to the working poor, but at the end of the day there will be a core of people whose lives are fundamentally fractured and who will need permanent intensive assistance.
        Our concept of homelessness could stand some revision, I think.

        Instead of thinking of it as episodic, its better to think of it the way we think of divorce or bankruptcy, where a certain percentage of marriages and businesses will collapse and we just build that into our understanding of how society functions and budget our resources accordingly.

        *You knew I was going to pound this drum, right?

          Quote  Link

        Report

        • core of people whose lives are fundamentally fractured and who will need permanent intensive assistance.

          This, so much, and no one wants to pay for it because so often, it is episodic. A certain percentage who go through treatment will relapse, and people get annoyed at that. People know it’s not like recovering from a broken leg, but unless they’ve lived through addiction, either themselves or a loved one, they don’t REALLY know it’s not like a broken leg.

          And let’s be painfully honest here, the reason for this isn’t that people are assholes. It’s because we treat addiction like a crime, and addicts as criminals. And until that changes, at ALL levels of government*, this is going to be an issue.

          *You knew I was going to pound this drum, right?

          I’d wonder if the pod people got you if you didn’t.

          *Seriously, it does no good for a city or state to decriminalize it if the feds are a constant threat to any efforts to treat it as a public health issue.

            Quote  Link

          Report

        • wage stagnation*.

          Yes and No.

          Between 1976 and 2006, Median Household income grew by 18% (the commonly quoted stagnation); But Personal Income per Person increased by 80%.

          Household Mix has changed: inflation-adjusted median household income for most household types increased by roughly 44 percent to 62 percent from 1976 to 2006
          So in other words, we have a lot more single mother/father households.

          There are more issues with the claim that wages have been stagnant, Inflation is measured generously, the census excludes things most people think of as income and also non-monetary benefits.

          https://www.minneapolisfed.org/publications/the-region/where-has-all-the-income-gone

            Quote  Link

          Report

          • Yes, that is all correct, and the takeaway is that the picture is mixed, since some subgroups like Boomers are doing much better than other like Millennials, college educated are doing better than not, and so on.

            Further, income is only one metric of wealth. Another is security. In past decades many people had more job security, defined benefit pension plans and a more robust safety net in the form of either larger family or the government.

            They also were given nearly- free college education and generous financial assistance in the form of the VA or FHA mortgages. In 1965 for example, a veteran could move into a brand new home in the San Fernando Valley for one dollar down payment. Yes, one dollar.

            Remember the movie The Graduate? Dustin Hoffman’s biggest fear is that he will fall into a lifetime job in Plastics.
            That was a commonly expressed fear of the Boomers, is to be trapped in dull guaranteed lifetime jobs where a single income was enough to buy the house in the suburbs and go to Disneyland once a year with the kids.

            I think it is safe to say that no one has that fear anymore.

              Quote  Link

            Report

            • The way we said it in colleges was “A house with a white picket fence, a Ford Country Squire station wagon with faux wood paneling, and 2.7 kids”

              I’m just endorsing how different things are now. Is this because of Reaganism or globalism?

                Quote  Link

              Report

            • Further, income is only one metric of wealth. Another is security. In past decades many people had more job security, defined benefit pension plans and a more robust safety net in the form of either larger family or the government.

              They also were given nearly- free college education and generous financial assistance in the form of the VA or FHA mortgages. In 1965 for example, a veteran could move into a brand new home in the San Fernando Valley for one dollar down payment. Yes, one dollar.

              You’re remembering the past through rose tinted glasses. The stats here are pretty one sided.

              Gov spending on entitlements and social spending has increased MASSIVELY in percentage of the GDP since 1965. The GDP itself has also increased massively. Incomes have increased massively. Ditto college degrees (10% to 34%). Ditto civil/social rights. Ditto technology.

              We are safer, better educated, richer, more secure, have more rights, and have a better social safety net today than we were in the 60’s. We also have multiple things which simply didn’t exist then.

              Remember the movie The Graduate? Dustin Hoffman’s biggest fear is that he will fall into a lifetime job in Plastics.

              Dustin Hoffman’s character had a college degree (10% of pop then, by today’s standards it’d be a Masters Degree), was an Engineer, White, Male, and worried about which Grad program he’s going into. Add all of that together and you’re at least looking at something like the upper 2%.

              So yes, that character didn’t need to worry about his financial security any more than someone in the top 2% today needs to worry about it. Instead he could focus on finding a fulfilling career and banging multiple women with actress level good looks.

              The Disney reference is interesting; In 2016 (most recent year I have stats) 54 million people visited Disney, so today it’s available to the masses.

              Claiming we should be more worried now than in the past is simply narcissism. If we’re going to compare worries, then in the 1965 being drafted and dying in the war was a thing while COLAs for Social Security were not.

                Quote  Link

              Report

        • Wage stagnation? Really? Putting aside the question of whether that’s even a real thing, especially in Seattle, it’s a pretty big stretch to blame it for homelessness. Homeless people tend not to be employed at all. Even someone earning minimum wage is going to be able to afford some kind of housing, though it may involve roommates.

          Also, when housing is supply-constrained, it basically doesn’t matter how high or low wages are—rent will rise until it gets expensive enough to push enough people out (of the city, not into the streets) to balance supply and demand.

            Quote  Link

          Report

  2. I have mixed feelings about “homelessness”, per se.

    Once upon a time, I had a friend who was homeless. She did house-sitting. Most of the time. A few weeks each year, she slept on the couch of friends, or in her car. She was a competent, attractive person, who had a regular job. This was just her way of saving a fair bit of money.

    She is not what we think of when we say “homeless”. And yet, there are a lot of people out there who are like her these days, I think.

    Would she have decided to change her lifestyle and live in “low income housing”? I don’t think so. Not when she spent most of her nights in some very nice houses.

    And yet, we have a serious, serious problem which I don’t want to brush off. Housing is really expensive, and inner city congestion is terrible. We need to change the way we live, the way we work, and the way we get to work. It isn’t going to be cheap or easy.

    So, I am unsure of this as a plan for “helping the homeless”. But as a way to drum up revenue to deal with, in a general way, the problems caused by all those people commuting to work in downtown Seattle? It sounds pretty good.

      Quote  Link

    Report

    • An acquittance of mine through dance is a young attractive woman that calls herself a nomad. She travels the country and the world staying in different places briefly. Sometimes she stays in a friend’s place and sometimes she pays for her own short term lease. She does something for money but I’m not sure what exactly. I’m pretty sure it isn’t that based on her personality, beliefs, and Facebook posts. I’m divided about this. It seems like a rather adventurous way to live. It also seems like the type of person that other people have to pay for eventually because they didn’t do anything to build up their own wealth. Yes, I realize this is an envious belief.

        Quote  Link

      Report

  3. Dealing with chronic homelessness is expensive. It requires more than just cheap housing. Usually substance abuse and mental health treatment, job training, sheltered employment are needed. I’m curious how they plan to spend the money especially since the tax ends after 5 years. Or at least that is the plan. Will they set up treatment programs and let them go in a few years or will they plan to find funding for them. There are subgroups of the long term homeless each which need different solutions. I wonder if they are seeing that.

      Quote  Link

    Report

  4. It seems like the kinda thing that only works, however much it actually will, due to Seattle’s geographic extent. I.e. Seattle did a good enough job of annexation overland to inhibit businesses just moving over the border.

    It still seems like an odd methodology for a tax, and one that is just waiting for the first person to figure out how to game.

      Quote  Link

    Report

  5. I think its amusing how Amazon is harumphing about the cost of this tax, on the very same day we see a post about them boosting the cost of Amazon Prime by $20.00.

    Amortized across all Amazon purchases in the Seattle area, how much will this tax add to each one?
    A penny? a tenth of a penny?

    How many purchases will not be made for the sake of this tax, versus the $20.00 increase?

      Quote  Link

    Report

    • I don’t think it’s that Amazon can’t afford it, I think it’s that Amazon (& Starbucks, etc.) are tired of being seen by the city as a piggy bank they can tap whenever the city needs something, all the while city leaders talk shit about the companies who provide an awful lot of jobs to the city, many of them middle class and above. And Amazon is not jacking up residential real estate prices all by itself. The residents are all too happy to encourage bidding wars on properties for sale.

      Sure, it can afford a $500/head tax. And in 5 years, it’s a $1000/head tax, then $1500.

        Quote  Link

      Report

      • Right right.
        And Amazon derives no benefit from its access to Seattle’s pool of highly educated workforce, kept safe by its social norms of behavior and civic spirit?

        Given that Amazon’s CEO has declared that he has so much money he literally has nowhere to spend it except to shoot it into space, the notion that he is “tired” of being seen as a piggy bank seems a bit…silly.

          Quote  Link

        Report

        • We aren’t talking about Bezos and his personal fortune, we are talking about Amazon.

          And Amazon derives no benefit from its access to Seattle’s pool of highly educated workforce, kept safe by its social norms of behavior and civic spirit?

          Amazon does pay taxes to the city, county, and state. So do all their employees who live in the city (in the form of sales and property taxes, WA has no income tax*). The also pay various fees, and donate to local social causes, both public and private, and even operate their own local social service orgs. One has to wonder just how much more you think they should pay before they’ve fully compensated society for all the benefits you seem to think they take advantage of? And do you consider, in your calculus, the benefits that the city, county, and state accrue by having Amazon within their borders?

          When has a corporation finally paid their ‘fair share’?

            Quote  Link

          Report

        • Also, let’s keep in mind the direction of causality here. Amazon attracts the talent to Seattle, and has for a very long time (along with Microsoft, Boeing, ad other companies). Those companies started in Seattle and have served as talent magnets for a lot longer than the city itself.

          Another thing to keep in mind, there is nothing terribly special about Seattle when it comes to talent, other than there are companies here that talent wants to work for. Other cities have competitive Universities, and cultural attractions, and night life, etc. This is like a conversation I’ve had with my wife. As I’ve mentioned before, her group is getting moved to the Phoenix area. Only 10% of the current employees are being relocated, the rest are being VLO’d, or offered early retirement, or just plain laid off. A common complaint from the ones being laid off is that they are the only ones who can do the work they have been doing (for various reasons).

          No, they aren’t. There are plenty of people in AZ who can do that work, and already are doing that work.

          Having a local pool of talent is nice, but lots of cities have perfectly comparable pools of talent.

          Also, there are two ways to look at the resistance to this tax scheme. One is that corporations are greedy and don’t want to pay more in taxes (and let’s remember that corporations will pass the cost of the tax on as much as possible; it never comes out of the profit line, it always hits customers or employees), the other is that it’s an act of resistance toward government that has already proven itself incompetent to deal with the task it wants more money for. As has been noted, the city has already been spending hundreds of millions to combat the problem, and the result has been an increase in homelessness. Clearly whatever they’ve been doing is not working, and if they aren’t willing to change course and do something different, why should companies willingly allow themselves to be taxed further?

          Why this assumption that the government should get more money to waste through incompetence?

            Quote  Link

          Report

          • I don’t think there is anything mysterious or any Big Statement about the resistance to paying more. Who wants to pay more for anything, including Amazon Prime?

            And true, Seattle isn’t the only possible location. But there is a reason Amazon hasn’t moved to Kansas City or Jackson Mississippi, and there isn’t any reason to think a tiny pinprick tax will change the equation.

            I mostly object to this notion that gets floated everytime we have these sorts of discussions, where the corporate entity is considered to be the goose that lays the golden eggs, and we should be thankful for their presence.

            Especially when set alongside the framework that says that capitalism is the set of voluntary transactions of equals, each of whom brings something of value to the equation.
            In this case, there is this implicit assumption that the employees’ contribution is essentially worthless, and they are kept employed merely through the company’s beneficence. Like, any group of people anywhere could do their jobs.

            If this is true, then is confirms my suspicion that technology is in fact rendering labor worthless.

            If Amazon could set up shop anywhere, and its tasks be performed by anyone, then why not nationalize it and run it like a public utility? There isn’t some special magic skill that its employees have, right?

              Quote  Link

            Report

            • It’s tasks can’t be performed by ‘anyone’, but the people with the requisite skill sets exist in many places. If Amazon wanted to start moving people, it could attract the people it needs to wherever it needs them.

              The only question is how much effort/money it wants to spend doing that. The benefit of Seattle is that there is a pool of talent here that it is easy to draw from. But similar pools of talent exist in other cities.

              f Amazon could set up shop anywhere, and its tasks be performed by anyone, then why not nationalize it and run it like a public utility?

              How in the hell do you go from, “Amazon employees are not super secret special people” to “We Can Nationalize It!”? WTF is that? It makes not a lick of sense. That’s not how or why you would nationalize a company or regulate it like a utility.

                Quote  Link

              Report

              • Who is bringing what value to Amazon operations?
                If the employees are essentially interchangeable with any group anywhere, their value added isn’t very much. In this view, they could be in Mexico, or China, or Kansas.

                What value is being brought by the leadership? Amazon doesn’t make anything, they really just act as a retailer connecting makers to consumers.
                Except unlike traditional retailers, almost all of their expertise is automated by software- there isn’t some human deciding to suggest socks now that you bought shoes, its software.

                So where is the value being added by Bezos and the stockholders? What benefits are they delivering to the end consumer that justifies their profit?

                Would the consumers be better off if the government used its massive capital to acquire Amazon and merge it with USPS, to form one giant entity, and cut out the profit taking by the Amazon stockholders?
                Or turn it into a regulated utility like the phone company?

                And like my question elsewhere, before we disappear down a rabbit hole of econometric charts&graphs, consider our gut reaction.

                Does the concept of a socialized Amazon cause us to react with outrage at injustice, or mere caution about utility?

                  Quote  Link

                Report

                • Are you asking seriously, or rhetorically? Because the value isn’t just in what is done today, it’s what is done next week, or next year. It’s the innovation. You like to pretend that government is good at the innovation side of commercial and economic enterprises, but they aren’t, and never have been.

                  If Amazon was utterly stagnate, if they had innovated their shopping model to the point of vanishing returns, then one might be able to argue that it was time to turn it over to government and make it a public utility/service. But Amazon doesn’t hire tens of thousands of people just to keep web servers happy and keep an eye on the backend processing. The bulk of their staff is working on new ideas and ventures, and always have. That is WHY Amazon is exciting to work for, and why people uproot their lives to relocate and work for them.

                  So no, you can’t nationalize without effectively killing it.

                  That said, Amazon itself is something that requires talent, but not something that requires anything specific to Seattle to make it happen. Seattle offers things that Amazon wants, and it is able to fulfill certain needs relatively easily, but there is nothing special to Seattle that can not be found elsewhere. It’s just a question of when does the pain Seattle inflict overcome the benefits it provides.

                    Quote  Link

                  Report

                  • I am reacting from a gut sense of injustice in the way we collectively regard the relationship between workers and employers, private sector versus public.

                    Our national discussions like these tend to view workers as providing so little value that they are lucky merely to have jobs, much less be paid more for them.
                    All the talk about hard working people making exciting new things flies out the window the moment these hard working people ask for a raise.
                    And cities likewise provide so little value that they should pay companies to locate there, much less ask for tax revenue.

                    The whole thing reeks of the peasant mentality, whereby the feudal lord enjoys some mysterious mandate of heaven and is rightfully entitled to the full fruit of the harvest.

                    You are correct, the value of Amazon is created by those hard working employees,as well as the robust and wonderful civic environment created by the equally hardworking public employees of Seattle, and the rest of the citizens.

                    There is a very good reason why every year the CATO institute ranks as the very best places to be free to do business the highly taxed, highly regulated, high trust and collaboration societies like Hong Kong and Norway.

                      Quote  Link

                    Report

                    • I swear this is generational. This is an attitude I see a lot from my parents generation.

                      Let me try to explain this. I am an engineer who effectively took a minor in comp sci (UW-Madison doesn’t have ‘minors’, but I took a lot of Comp Sci electives). I spend my days writing software for engineers to use. I create value for my employer in doing so. But I do not pretend that my skill set is in anyway unique. It is uncommon, and that provides me a modicum of security, but I still have to get the job done. I offer no loyalty to my employer unless they offer loyalty to me (and these days, I don’t expect loyalty, certainly not the way my parents would expect it). I my employer starts expecting more of me than I feel I am properly compensated for, we can either renegotiate my salary, or I start looking for work elsewhere.

                      This is the reality I operate under. You may wish it was something else, but I don’t. Or rather, I don’t pretend it’s something else. It is what it is. It would be nice if employers were loyal beyond the mere paycheck, but I’ve seen too many people burned by a corporation deciding that loyalty was nice when the books were in the black, but when it gets to close to the red, loyalty is unaffordable. I will happily trade any expectation of loyalty for a bigger paycheck, and I do, every two weeks. And when things start feeling insecure at work, I try to exit on my terms, rather than theirs.

                      It isn’t peasantry, it’s mercenary. The whole concept of corporate loyalty, and letting the employer take care of you is, to me, peasantry. It’s the workers depending on the lords to honor the noblesse oblige so they aren’t left out in the cold. No thank you. I get paid well, I am careful about my expenses, I save, and if my employer someday lets me go, I made sure (and continue to make sure) that I have the skills to find work elsewhere in very short order.

                      IMHO, the sin of corporate America is that it sold the lie of loyalty so well that people believed it, even though it was a promise it had no real intention of keeping. We can not make a corporation be loyal to it’s employees. At best, we can make sure that A) employees are properly compensated (you get paid what you were promised), and B) that employers are not preventing workers from leaving in any way (blacklisting, secret agreements not to hire/poach, preventing employees from getting training, etc.). We have whole generations, mine included, as well as large swaths of millennials, who continue to buy into the lie and don’t protect themselves, and demand compensation equal to their value. And thus corporations continue to get away with underpaying people. (From what I hear, excepting warehouses, Amazon is not a company that underpays; I’m not sure what warehouses pay, so I have no idea if it’s worth the value provided – and we could have a whole discussion regarding Amazon warehouses, and workers, and deliveries, and automation).

                      And cities likewise provide so little value that they should pay companies to locate there, much less ask for tax revenue.

                      Honestly, that’s bunk. Cities obviously provide value, and they really should stop giving away the city just to attract a company (or a stadium). But on the flip side, they shouldn’t treat business like piggy banks. Cities and companies are partnerships. Each provides things the other needs and draws benefits. Honestly, both sides would do well to remember that.

                      highly taxed, highly regulated, high trust and collaboration societies like Hong Kong and Norway

                      That’s a three legged stool, and frankly, American politicians and bureaucrats have done a poor job building trust. Seriously, how many city governments do you have high trust in? We still have too much of a culture that is grudgingly accepting of (even admiring of) corruption for the trust to be high. Too many cases of corruption and accountability never see a courtroom, too many guilty parties walk away and find work easy enough in some other government or business.

                        Quote  Link

                      Report

                      • I don’t think your attitude towards labor is the norm.
                        Although its commonly asserted that labor is merely a commodity to be traded on the market, in my experience most Americans don’t actually view it as such.

                        Look at the attitude towards striking union members. From what I can see, the most common gut reaction is to view them as lazy and indolent, unwilling to work.
                        We don’t commend them as shrewd businesspeople making a sharp deal.

                        Most people seem to view labor through the lens of morality, that work itself is virtuous, and refusing to work is a sin.
                        So in a labor negotiation, labor is disadvantaged.

                          Quote  Link

                        Report

                    • There is a very good reason why every year the CATO institute ranks as the very best places to be free to do business the highly taxed, highly regulated, high trust and collaboration societies like Hong Kong and Norway.

                      What makes you think these places are highly regulated? Sweden, Norway, Iceland, Denmark, & Switzerland all lack minimum wages. Hong Kong’s min wage is $4.42 (USD) which basically means it’s irrelevant.

                      As far as I can tell they’ve earned their places on the index of economic freedom by NOT having the gov meddle in the economy very much.

                        Quote  Link

                      Report

                  • I greatly admire your patience. I’m more inclined to take a flamethrower to the economic leftists, not because I’m not sympathetic to their concerns, but holy freaking hell they can at least acknowledge that when companies have to go out and raise debt and equity, that debt and equity comes with a cost.

                    The whole willful ignorance schtick has to stop or I’m going to lose it.

                      Quote  Link

                    Report

                  • Seattle offers things that Amazon wants, and it is able to fulfill certain needs relatively easily, but there is nothing special to Seattle that can not be found elsewhere.

                    I’m not sure that this is true. Seattle has a pretty deep talent pool for software. There aren’t many cities in the US that can compare, and those are all even worse in this respect: The Bay Area, New York, Boston, and Washington DC. Seattle, at least, is located in a state without an income tax, whereas California’s tops out at an utterly obsecene 13.3%. A $275 head tax doesn’t come close to that.

                      Quote  Link

                    Report

                    • Like I said, it isn’t the tax specifically I object to, it’s Seattle levying the tax only against companies that make $20M or more in gross receipts per year.

                      Make a head tax apply to all business, and at least it’s fair. Hell, make it progressive if you want, but spread the pain so everyone feels something.

                      Also, Amazon is one of the reasons Seattle has a deep talent pool. If Amazon were to pick up and in one year move it’s entire operation to, say, Jackson, MS, it would suffer mightily, as there is no way it could convince enough talent to relocate, and Jackson does not have the pool to restaff with.

                      But do it slowly, and to the right location, and the pain would be annoying, but manageable. Talent follows challenges, but only within reason.

                        Quote  Link

                      Report

            • Let me try a different approach…

              Would you be so eager to defend the city’s right and/or wisdom to tax big businesses if the stated approach for dealing with homelessness was to use the money to build Vagrancy Detention Facilities, where homeless people would be arrested (for vagrancy), and housed in these facilities, in 2m x 2m units, with three square meals a day?

              You know, honestly I’m not denying the city the right to levy a tax, I’m objecting to a tax that stinks of a Bill of Attainder against successful businesses. Had the city levied the tax against all businesses, I wouldn’t care much. Hell, they could have made it a progressive tax, so the big guys would still pay the lion’s share, as long as the pain was distributed across all entities, I’d be OK with it. I wouldn’t like it, but at least it would be fair-ish. At least the whole of the city would be pitching it to help, instead of laying it at the feet of a few.

              But setting the cut-off at $20M/yr means only a handful of companies are picking up the tab for a problem the entirety of the city has helped to create.

              And because the city council, who refuse to entertain ideas like relaxing square footage requirements for new housing, or rezoning single family home areas to allow for more density, are an actual proximate cause of the issue, I’m disinclined to let them try to tax their way out of the problem they’ve created.

                Quote  Link

              Report

              • If your concern is about it being an unfair Bill of Attainder, I don’t particularly disagree.

                I further agree that the cost of homelessness should rightfully be born by all citizens, to counter the prevalent notion that it should be swept under the rug and made invisible.

                  Quote  Link

                Report

              • If you object on it being a Bill of Attainder, I don’t disagree.

                Further, I agree that the costs of homelessness should rightfully be borne by everyone, to avoid the tendency to want to sweep it away and make it hidden.

                  Quote  Link

                Report

              • And because the city council, who refuse to entertain ideas like relaxing square footage requirements for new housing, or rezoning single family home areas to allow for more density, are an actual proximate cause of the issue, I’m disinclined to let them try to tax their way out of the problem they’ve created.

                That. That exactly.

                I seriously doubt the Council will be do anything useful with this money as long as they’re not willing to do things like change square footage requirements (etc). Certainly their current efforts have been either useless or counterproductive. This feels like one of those “it’s for the children” causes were the gov raises money and then ends up spending it for something else entirely.

                  Quote  Link

                Report

                • The Amazon thing isn’t so much a partisian or left vs right things, though it will inevitably veer that way eventually, as much as it was Trump just really has no clue what he is talking about with Amazon and the Post Office. Good on PG Brennan for holding the line here, and there has been credible reporting that even after aides have explained the situation to the president he is just convinced the opposite is true. Small package is the one segment USPS has that actually has some revenue, and a lot of that is attributed to Amazon.

                    Quote  Link

                  Report

                  • Oh I agree, that very few “serious” pundits of any political stripe would think that is anything but an insane abuse of power.

                    But the reality of American politics now is that for the conservative voting base, “serious” means “MSM” means “Deep State” means irrelevant.

                    The shotcallers and opinion shapers now on the right are people like Jim Hoft and Sean Hannity and morning couch monkeys on Fox & Friends.

                    I expect them to be calling for the scalp of the Postmaster shortly.

                      Quote  Link

                    Report

          • This is very much in line with the reasoning that Boeing put forth for why they moved their corporate HQ out of Seattle. Reading through the material for the post there were lots of reasons Boeing did it, but philosophically there is one that goes toward what you are getting at here. The one linked op-ed from Gates, who has covered Aviation forever, talks about breaking “the 100 years of inertia” that Boeing made planes in a certain way at a certain place. For a company that is locked for the foreseeable future in a one-on-one fight with Airbus, HQ in Chicago and building manufacturing plants in South Carolina and facilities in Texas and elsewhere was a necessary step to being more globally minded. Leverage on the unions, taxes, the then-CEO wanting to live elsewhere-all that played a role. But there is blunt, brutal truth to a company admitting as Condit did they felt they needed to physically separate from the area to make sound strategic decisions that otherwise would be formed by emotional attachment.

              Quote  Link

            Report

  6. It’s funny how if a terrorist made veiled but perfectly viable threats to attempt to destroy a cities economy, it’d be front page news and the machines of war would be put into gear, but when a corporation does it, that’s just considered the Invisible Hand in action and if you question that fact, you just don’t understand economics.

      Quote  Link

    Report

    • Depends on the means the terrorist was using. If he’s going to plant a bomb, or poison, or disease, or through theft or fraud, yeah, it’s bad.

      But that’s not what Amazon did, is it? Why should a corporation be forced to stay in a place it no longer finds agreeable to it’s business goals? If your landlord decided to jack up your rent by $150, should you be obligated to resign the lease just because it makes the landlords life easier and he won’t have to spend time and money looking for a new tenant?

        Quote  Link

      Report

        • Reject all you want, the reality is, a corporation is just a collection of people under a legal construct. That legal construct has the right of exit, same as you or me. Good luck changing that set of laws.

            Quote  Link

          Report

            • When it comes to immigration, the only moral position is open borders.

              Kind of. Americans are crazy good at assimilating immigrants. We have the most aggressively assimulistic culture on the planet. We have a habit of taking the world’s wretched and turning them into productive citizens. We should do more of it, it’s good for the economy.

              But that’s us, most places are nowhere close to that.

              Lots of places are mono-cultural and/or mono-ethic and/or just not that good at it.

                Quote  Link

              Report

        • So, you can destroy an economy, as long as it’s done legally?

          Yes, absolutely you can. For example The City Council is allowed to create economic policies which wreck their economy. Or if they decide to get rid of all other taxes in favor of a Wealth Tax, Jeff Bezos is still allowed to move.

          I doubt this tax is a big deal by itself, what really matters is the overall package, but given how much money Amazon is bringing into the community I question the political signalling. Being specifically targeted for harvest like a mushroom is irritating and it’s hardly the impartial level playing field that the gov is supposed to be supplying.

          I also seriously question any tax which is based on gross sales and doubly question payroll taxes in general. High volume, low margin groups just took a hit and ditto very high payroll operations (making movies for example).

            Quote  Link

          Report

        • Why the victim-blaming? Moving a large business is very expensive, so the government has to get pretty handsy before management decides to cut losses and seek refuge elsewhere. It’s hard to see how any reasonable person could see this happen and blame the business for fleeing instead of the government for driving them out.

            Quote  Link

          Report

    • Never seems to occur to people that warfare goes both ways.

      Seattle, or Washington, or the United States, could decide that in order to do business in our territory one needs a license, and relocating outside the territory means you lose access to that market.
      If Amazon doesn’t want to do business in Seattle, there are plenty of bright young entrepreneurs who will.

      But, like the movie War of The Roses, this sort of battle is a game you win by not playing.

        Quote  Link

      Report

      • You can’t really do that due to the interstate commerce clause and other parts of the constitutions, recall the discussion about mail order liquor which is the one place where state law does trump the interstate commerce clause due to the text of the 21st amendment. In particular a business that needs no physical nexus in a community to do business, which applies to most of Amazon’s businesses both the retail, the cloud and digital distribution. You just move the distribution center to George (Washington) a town on the Columbia River east of Seattle. on I-90. Or if you want to get out of Wa to the Dalles etc.

          Quote  Link

        Report

        • Although the Big Lie in constitutional law for the last century or so has been that the Interstate Commerce Clause is a blank check for Congress to exceed the limits of the powers painstakingly spelled out in the rest of Article I Section 8, if you actually go back and read the Federalist Papers, the clause is really only discussed as a limit on state power. States levying taxes on and otherwise interfering with goods passing through them was a problem under the Articles of Confederation, and the primary motivation for giving Congress exclusive authority to regulate interstate commerce was to stop this.

          Unlike with the general welfare clause, which the antifederalists warned would be interpreted as a blank check, literally nobody anticipated the brazen disingenuousness of modern commerce clause jurisprudence.

            Quote  Link

          Report


          • So here’s the thing about the CC. I agree with you that it’s been interpreted much more narrowly than is warranted. Narrowly? Yes, because the extant jurisprudence is based on a very strict textual analysis that ignores historical context and original intent. Politically that interpretation survives because both the left and right find it useful, albeit for different ends. Then too, if you want to insist upon a strict reading of A.1, S.8, you’re back to strict textualism. Ack!

            But my favorite along these lines is the 2nd amendment. You don’t even really need to refer to extra-constitutional sources; the original intent is spelled out in the militia clause. So do you feel similar outrage over Heller? Or do you do that thing everybody else does and exercise your outrage selectively while pretending to adher to principles?

              Quote  Link

            Report

            • the original intent is spelled out in the militia clause.

              If memory serves, there were a lot of civilian independant militia’s back in that day. The 2nd AM might as well have the Minutemen’s name on it.

              Minutemen were civilian colonists who independently organized to form well-prepared militia companies self-trained in weaponry, tactics, and military strategies from the American colonial partisan militia during the American Revolutionary War. They were also known for being ready at a minute’s notice, hence the name.[1] They provided a highly mobile, rapidly deployed force that allowed the colonies to respond immediately to war threats.

              https://en.wikipedia.org/wiki/Minutemen

                Quote  Link

              Report

                • Sure. But there aren’t now, and there haven’t been for a very long time.

                  True, but civilian independent militias mean the 2nd AM was an individual right.

                  I, a civilian, may need to get my fellow civilians together and form a militia. That’s impossible if we don’t have guns.

                    Quote  Link

                  Report

                  • Dark Matter: True, but civilian independent militias mean the 2nd AM was an individual right.

                    I, a civilian, may need to get my fellow civilians together and form a militia.That’s impossible if we don’t have guns.

                    If I read you correctly, what you’re saying is that if the Constitution and Bill of Rights were ratified in, say 1781 vs. 1789 and 1791, that Daniel Shays exercised his Second Amendment rights and shouldn’t be seen as the insurrectionist he was.

                    What you’re also saying is that the Constitution recognizes citizens as sovereigns.

                    Between you and a discussion I had with Hanley over the weekend, I need to hire someone that can ghost write a Second Amendment series I’ve had in my head for the last two years or so. I talk they type. I’ll pay them $1.

                      Quote  Link

                    Report

                    • How many years were between the ratification of the First Amendment and the Alien and Sedition Acts?

                      How impressed would you be with my argument that “the First Amendment doesn’t mean *THAT* because of John Adams!”?

                        Quote  Link

                      Report

                    • What you’re also saying is that the Constitution recognizes citizens as sovereigns.

                      No, I’m saying militias were common enough and important enough during the revolutionary war that they got support written into the Constitution, and these militias were often civilian and independent. You civilians, the British gov has become repressive, grab your guns and overthrow it.

                      Like the rest of the bill of rights, the 2nd AM is designed to empower the people and restrict the gov, not the reverse.

                        Quote  Link

                      Report

    • I could probably tell what I find entertaining but I’m not sure if you’d find my sense of humor up to your standards.

      For example – why did the chicken cross the road? To run away from the dude that equated a company’s decision to relocate to a terrorist threat. Ok, that’s why I’m not a comedian

      Corporate relocations/new facilities/material news DO make front page news. Boeing did when they relocated to Chicago, even before it was formally announced. General Electric’s decision to relocate its corporate headquarters out of CT and into the Boston suburbs was played out in the media long before the final decision was made. Any time a company makes a large scale investment that could bring jobs and growth to a local economy, it’s in the news. Hell, JP Morgan’s decision to demolish its own corporate HQ to put up a larger building is in the news (although mostly for the wrong reasons).

      I need not go into abstract Invisible Hand free market theory and then hit you over the head for questioning economics. Personally, I don’t give a flying f–k if you want to waive the flag of anti-corporate/anti-capitalist leftist economic populism proudly (you have a few friends here it seems). There are worse things to be, like being someone that attempts to head off criticism by having conversations with one’s self while being unaware of the criticism they’re really exposing themselves too.

      But what do I know…I’m old.

        Quote  Link

      Report

  7. This isn’t about the homeless. It’s about buying votes. Nothing wrong with that; certainly not morally worse than bribing a company to stay.

    The homeless are treated by voters and taxpayers as an aesthetic blot and a nuisance. If they wanted to do something about the homeless, the money would have gone to the cops. No, this is a housing lottery the winners owe you one for winning.

      Quote  Link

    Report

    • Of course the question about the homeless is how many would have been institutionalize in the 1950s? in Cuckoo’s nests?
      The public health issue in San Diego gets close enough to a danger to themselves or others to consider institutionalization

        Quote  Link

      Report

  8. Seattle face some very serious issues – congestion and traffic are very bad, and this wastes an enormous amount of eveyone’s time. Housing costs are high, though not nearly as bad as NYC or SF. But they are likely to get worse. Homelessness is an issue as well.

    I don’t know that I think it’s a bad idea to tax something you want less of. That’s sort of classic, right? So they want less employees in the city. This will mitigate congestion and perhaps relieve some pressure on house prices. However, the tax strikes me as not terribly equitable, since it targets only large employers. This seems like a purely political slant. If the city taxed all head count, not just that from the few large employers, could it get enough support to pass? If not, this strikes me as a failure to “eat your own dog food”.

    I mean, every head in the city adds to congestion and housing costs.

      Quote  Link

    Report

  9. The interesting thing is that this is a head tax being pushed by the left. It’s generally believed by economists that the incidence of payroll taxes is mostly on workers, so this is in effect a highly regressive income tax. Backed by Kshama fishing Sawant, while Common Dreams cheers her on. Amazing.

      Quote  Link

    Report

Leave a Reply

Your email address will not be published. Required fields are marked *