Sarah Holder is a staff writer at CityLab covering local policy, affordable housing, labor, and technology.
The city’s ambitious plan to fund affordable housing by taxing corporations had a very short life. What happened?
In a rapid about-face, the Seattle City Council voted Tuesday to overturn a new tax they had unanimously approved just a month earlier, intended to fund affordable housing and homelessness initiatives. Lawmakers voted seven to two to reverse the tax on the city's largest corporations after an aggressive campaign to put a repeal of the law on the November ballot.
"[T]his is not a winnable battle at this time. The opposition has unlimited resources," said Lisa Herbold, who voted for the tax, and then for the repeal.
The vote is a significant blow for activists pushing back against the increasing unaffordability that has followed Amazon and other large corporations into Seattle. Other cities, including Mountain View, home to Google’s headquarters, are considering similar proposals.
Opposition to the tax was advanced by a new business-backed non-profit, No Tax on Jobs. Corporations, including Amazon, Starbucks, Vulcan, and the Washington Food Industry Association contributed a collective $352,775 as of last filing to get a referendum on the November ballot.
By Monday, No Tax On Jobs said it had collected 45,833 signatures—far greater than the 17,000 they needed—and would have certified the new initiative on Thursday. Seattle Mayor Jenny Durkan and the council beat them to it. Now, the repeal won’t need to be put to a vote.
"We heard you," wrote Durkan in a statement Monday, implicitly addressed to the opposition leaders. “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.”
Less than a day later, on Tuesday morning, a hearing was called. After an hour of public comment, during which Seattle residents—tech workers, Amazon employees, teachers, socialists, and self-proclaimed anarchists alike—pleaded angrily with the city council, the repeal was confirmed.
The largest three percent of Seattle’s businesses would have been subject to the tax, charged with paying $275 per employee per year. The tax was dubbed the “Amazon Tax” because Amazon, now the second-richest corporation in the world and led by a CEO with a net worth of $140 billion, would have supplied about $13 million of the city-wide fund. All together, the city would have raised $47 million annually to build affordable housing in a city with a median rent of over $2,000, and support the city’s homeless population of more than 11,000. Since 2012, almost 700 homeless residents of King’s County have died.
At Tuesday’s hearing, some residents acknowledged that the tax would not be adequate to address the scope of Seattle’s problem. But others said that without an alternative, it would be irresponsible for the council to repeal it. “Yes, we need other solutions, but we should have them in place before we remove what we’ve got,” one man said. “It is immoral to repeal this tax … without a replacement in place,” said another woman. “If you repeal with no notice and with nothing in place, more people will die.”
Amazon employees and other tech workers from the area also spoke up. “I want lots of housing to be built, so you can be a waiter and live in Seattle; you can be a plumber, or a janitor, or a school teacher,” said Aubrey Pullman, who took the day off work at Amazon to attend. “I want all kinds of people in the city—not just rich people ... If it means I have to get a different job because Amazon moves, I will take that.”
Amazon has threatened to shrink its presence in Seattle before: In the days leading up to the initial tax vote, it halted construction on a downtown building and said it would consider leasing, not occupying, another Seattle office space. But after the tax was approved, other Seattle-based businesses like Starbucks quickly rallied against it too, pouring thousands into a signature-gathering campaign to put a repeal on the November ballot.
“In lightning speed, with zero accountability to our movement, zero accountability to renters, zero accountability to the majority of people in Seattle who are reeling at housing prices, they’re set to destroy [this tax] within one day,” said City Council Member Kshama Sawant, who belongs to the Socialist Alternative Party. She and Teresa Mosqueda were the only two council members to abstain from signing Durkan’s Monday statement, and to vote “no” Tuesday.
An hour of public comment was filled with activists’ yells of “We are ready to fight! Housing is a human right!”; “Stop the repeal!”; and “Let us speak!” But No Tax on Jobs representatives were not absent from the hearing. “We’re tired of not seeing results, and not knowing where the money is being spent,” said Julie Hall, a volunteer who collected 500 signatures for the organization.
It’s a sentiment John Murray, No Tax on Jobs’ communications director, had expressed to CityLab last week: “The solution is not to give the city council more money to spend, but to ask them to spend it more responsibly and more efficiently.”
Sawant sees the repeal as a capitulation to business interests, as do many of her followers. Even some council members who voted for the repeal acknowledged that the move was a necessary tactic to appease the businesses that support Seattle’s economy. "I don’t want the repeal of the [head tax] to be a loss,” said Herbold. “It’s a temporary setback and I am dedicated to find progressive revenue sources.” After Tuesday’s vote, the question of where—and when—they’ll find that revenue remains.
CORRECTION: A previous version of this article misspelled Aubrey Pullman’s name.