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caption: Seattle Councilmember Kshama Sawant announces a new proposal to tax Amazon and other large companies in Seattle, Feb. 12, 2020. 
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Seattle Councilmember Kshama Sawant announces a new proposal to tax Amazon and other large companies in Seattle, Feb. 12, 2020.
Credit: Kate Walters / KUOW

Sawant announces proposal for 'Amazon Tax'

Seattle City Council member Kshama Sawant has unveiled her plan to tax big businesses like Amazon to fund housing and environmental efforts.

The proposal would implement a 1.7% payroll tax on the top 3% of businesses in Seattle, as measured by the size of their payroll.

It would apply to companies with at least $7 million in yearly payroll, an estimated 825 companies in the city, according to Sawant’s office. Grocery stores, nonprofits, and government and educational employers would be exempt.

“This will be a big business tax,” Sawant said at a press conference announcing her proposal Wednesday.

“It is not a tax on workers, it is not a tax on jobs, and it is not a tax on small businesses,” she said.

Legislation based on her proposal has yet to be drafted, but Sawant said that will happen in the coming weeks. She expects to formally submit legislation to the City Council before the end of the month, according to a press release.

Sawant said her proposal would raise $300 million per year. The majority of that money would go toward building affordable, publicly owned housing. This would include permanent housing with social services on site for people who have been chronically homeless.

Sawant said permanently affordable housing for working class families is important to disrupt the pipeline to homelessness.

Her office estimates revenue from the tax could build 8,000 new affordable homes over the next decade.

The remaining 25% of the money would go toward converting existing homes that use oil or gas to electricity.

When asked if Sawant desired or needed the support of the business community, she said she and her supporters have to prepare themselves to build a movement despite potential opposition from big businesses.

She said nothing is stopping large corporations from joining them.

“The door is open for them, but we are not going to hold our breath,” Sawant said.

The new proposal is larger than the controversial business tax that the City Council passed, and then quickly repealed, in 2018.

In a statement, Seattle Mayor Jenny Durkan said she could not support the plan.

“We need a new, progressive business tax to help our most vulnerable communities, which is why I worked on a plan in Olympia that has the broad support from labor, community advocates and even some in the business community who want to tax themselves to address our homelessness and housing crisis,” the statement said.

“Being progressive means actually making progress. While slogans are nice, a failed, divisive fight that is high on rhetoric but low on outcomes, or one that funds lawyers instead of housing, is not an actual solution.”

A spokesperson for the Downtown Seattle Association also expressed support for a county-wide approach to raising funds, saying a Seattle-only approach undermines the effort to address homelessness regionally.

Sawant’s proposal may become part of the discussion in Olympia as legislators consider the proposal championed by Durkan and County Executive Dow Constantine to allow King County to tax businesses with high earners to help address homelessness. That proposal would raise an estimated $121 million for the county per year.

There’s support from some in the business community to include a clause in that legislation that would prevent cities like Seattle from doubling up and enacting additional taxes like the one Sawant has proposed.

Seattle’s City Council has expressed strong opposition to such a clause. The current bill in Olympia does not include such language.

At this point, it’s unclear how Sawant’s council colleagues will react to her proposed tax on big businesses in Seattle.

Sawant said an effort to take the issue to voters with a ballot initiative may still be necessary, and it’s a strategy she and her supporters will keep on the table.

Sawant was recently charged with violating the city’s ethics and elections code for activities related to promoting such a ballot measure using city resources. Wayne Barnett, executive director of the Seattle Ethics and Elections Commission said he’s trying to police the border between city business and electioneering.

“In my opinion, the Councilmember’s promotion of a signature-gathering effort in support of a ballot initiative violates the Ethics and Elections Codes,” Barnett said via email.

Sawant has said she’s disappointed with the complaint, but she looks forward to resolving the matter.