The head tax is happening — but the weakened version passed by the Seattle City Council today won't address the scale of the housing crisis, some council members say.
After weeks of heated debate, Seattle lawmakers compromised this afternoon, agreeing to tax big businesses making more than $20 million a year in revenue to pay for homelessness services and affordable housing.
The compromise will raise about $50 million a year – $25 million less than the city’s Progressive Revenue Task Force recommended to address the scale of Seattle’s housing crisis earlier this year.
Last year, more than 21,000 households in King County needed stable housing.
Councilmember Lisa Herbold celebrated the passage of the head tax as a significant accomplishment, but acknowledged that she felt “the revenue we will generate is not enough to fully address the problem.”
Councilmember Lorena González also shared her disappointment with the current version of the bill at today’s meeting. “We had hoped—and I had hoped—we would be voting on a different package that more accurately represented the needed investments in this city,” she said.
A majority of City Council members initially supported charging these businesses $500 per full-time employee – hence the term “head tax.”
Amazon responded by halting an expansion of an office building in downtown Seattle. Amazon Vice President Drew Herdener confirmed to The Seattle Times at the time that Amazon would also consider subleasing, rather than occupying, a skyscraper in South Seattle.
Many in Seattle’s business community—as well as ironworkers and carpenters—also fought the bill, warning that passing the employee head tax would drive away economic opportunity.
— KUOW Public Radio (@KUOW) May 15, 2018
Meanwhile, Socialist City Councilmember Kshama Sawant, who supported the original version of the tax, accused Amazon CEO Jeff Bezos of bullying the city. Other critics characterized the company’s move, which would have potentially withheld thousands of jobs, as an attempt to hold the city hostage.
Mayor Durkan responded by proposing a lower head tax amount, at $250 per employee. This time, it was the City Council’s turn to balk. On Friday, a City Council committee voted to pass the more expansive version of the proposal, which would have taxed businesses $500 per employee in order to raise $75 million a year, and eventually transitioned to a payroll tax.
Working through the weekend, the mayor and council members settled on $275 a head. The head tax would raise $50 million and have the option of being renewed in 2023.
Seattle politicians have attempted head tax proposals at various points over the last decade to pay for municipal broadband and transportation. But in March of this year, the City Council’s Progressive Revenue Task Force—which included co-chairs Lisa Herbold and Lorena González—recommended the city pass a head tax to generate $75 million to address the city’s severe shortage of affordable housing, shelter, and services.
“We recognize that this is not enough or even close to enough to adequately address the crisis, but it is a significant and worthwhile start,” the report’s authors wrote.
In response to today's vote, Amazon Vice President Drew Herdener issued this 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 $2.8B in 2010 to $4.2B 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.