print header

# 1 Commercial Real Estate Information Company

  • Find Properties 
  • Market Properties 
  • Analyze Properties 
Products
Commercial Real Estate News

Seattle Officially Repeals 'Head Tax' Following Raucous Special Meeting

Updated: Repeal Could Have Ripple Effect on Efforts in Other Cities to Impose Taxes on Major Employers
June 12, 2018
Pictured: Amazon's Seattle headquarters campus. Courtesy: Amazon


The Seattle City Council voted 7-2 today to repeal its employee tax on large employers to fund affordable housing and services for the homeless, with members arguing that polling data showed that a well-funded opposition to the so-called "head tax" from business and other groups would likely succeed in repealing the tax at the ballot box in November.

"We don't have the time and we don't have the resources necessary to change enough minds to be successful at the polls in November," said Councilmember Lisa Herbold in anguished remarks during the more than two-hour meeting Tuesday, interrupted repeatedly by loud chanting and shouting by supporters and opponents of the tax. "Unfortunately, I and other people out in the streets doing this work have reached the conclusion that this is not a winnable battle at this time with this measure. The opposition has unlimited resources."

The rapid reversal comes less than a month after the council approved a watered-down version of the legislation that draw the wrath of Amazon, Starbucks and other large employers.

The civic group No Tax on Jobs announced over the weekend it had collected well above the 18,000 signatures required to place a repeal referendum on the November ballot. Group officials said the total had swelled to over 45,000 by the time of today's special city council meeting.

"I cannot in good conscience vote to repeal this proposal without a replacement strategy," said Teresa Mosqueda, who along with Councilmember Kshama Sawant voted to oppose the repeal, noting that the council worked to sharply scale back the tax from over $500 per employee to $275 per employee annually for large companies.

Amazon in early May paused construction on its Block 18 office tower and said it was reconsidering moving into Rainier Square pending the city’s vote. Despite the downsizing of the tax in the final days leading up to the May 14 vote, the measure drew sharp criticism from Amazon, Starbucks and other large Seattle companies.

Campaign disclosure forms on Seattle's Ethics and Elections Commission show that No Tax On Jobs received nearly $200,000 in pledges between May 18 and May 31 alone, including $25,000 each from Seattle-based Amazon, Vulcan and Starbucks, and $25,000 each from the Kroger and Albertsons grocery chains.

"When I see construction jobs being threatened, I will work my ass off to make sure there's a solution and that is what we did," Mosqueda said Tuesday. "And wirthin 48 hours of buying on the proposal this council unanimously approved, Amazon turned around and funded the opposition. I don't care if you're with labor or with business, a hollow handshake and a broken promise is not good practice."

Amazon Vice President Drew Herdener said in a statement that the council vote "to repeal the tax on job creation is the right decision for the region’s economic prosperity.”

"We are deeply committed to being part of the solution to end homelessness in Seattle and will continue to invest in local nonprofits like Mary’s Place and FareStart that are making a difference on this important issue," Herdner said.

Supporters on both sides of the issue spoke to the council at the public hearing, despite frequently being interrupted or shouted down by angry opponents.

Steve Murch, CEO of cooking app BigOven, who said he contributed $275 and helped gather signatures for the repeal ballot measure, said cities like Boston have spent far less per capita on the homeless issue than Seattle. Yet Boston is seeing a decline in the number of people living on the streets, Murch said.

“We’re compassionate," he said. "I voted for the $290 million affordable housing levy [in 2016]. I volunteer for Habitat for Humanity,” Murch said.

Amazon lighting artist Aubrey Pullman said he took time off work to attend the meeting to support preserving the tax. Pullman said housing prices in his neighborhood have doubled in the past six years.

“I want to live in a diverse and inclusive city. 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,” Pullman said. "I want all kinds of people in this city, not just rich people."

“It’s unacceptable we have such a housing shortage and if it means I have to get a different job because Amazon moves, I will take that," Pullman said.

Mayor Durkan and several council members said in a joint statement Monday that "it is clear 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."

"We heard you," according to the statement. "This week, the City Council is moving forward with the consideration of legislation to repeal the current tax on large businesses to address the homelessness crisis."

No Tax on Jobs, chaired by Seattle business executive James Maiocco, began collecting signatures to repeal the tax on May 18 and was poised to deliver the signatures before the June 14 deadline for referendum petitions.

According to the statement attributed to Durkan, Harrell and council members Sally Bagshaw, Lorena Gonzalez, Lisa Herbold, Rob Johnson, Debora Juarez and Mike O’Brien, "these challenges can only be addressed together as a city, and as importantly, as a state and a region."

Seattle's scuttling of its head tax could affect similar proposals that may be bound for the ballot in several other tech havens in the San Francisco Bay Area and Silicon Valley.

"One has to think that elected officials in Mountain View, Cupertino and and elsewhere are watching," wrote Jared Walczak, analyst with the Tax Foundation, in a blog post. "It took a while, but Seattle officials have figured out that taxing job creation is uniquely counterproductive."

As adopted, the tax was projected to generate $47.4 million a year with the intent of funding immediate services for the homeless and long-term affordable housing. According to a city Budget Office report on the repeal legislation, the city can avoid paying the cost of a referendum election if the council acts to repeal the legislation.

On the other hand, "people of color are disproportionally represented among the homeless and those in need of subsidized housing, and repeal of the tax will reduce the resources available to provide immediate support services and address their long-term housing needs," the Budget Office report added in its report on potential fiscal impacts.

Despite being included in the statement supporting the repeal, Councilmember M. Lorena González said in her own statement that she continues to believe the employee hours tax "was an appropriate policy choice to fund additional housing and human services for people experiencing homelessness."

"I regret that it appears that powerful and well-resourced interests have swayed public opinion to believe that more is not needed," González said. "I am deeply disappointed that certain members of the business community did not engage in good faith with the City of Seattle. Instead, they chose to double-down on polarizing the issue of homelessness and fostering divide amongst Seattle residents."

Durkan and her supporters on the council said "the city remains committed to building solutions that bring businesses, labor, philanthropy, neighborhoods and communities to the table."

"The state and region must be full partners and contribute to the solutions, including working for progressive revenue sources. Seattle taxpayers cannot continue to shoulder the majority of costs, and impacts," according to the joint statement.

Editor's note: This story was updated Tuesday afternoon to include the results of the special Seattle City Council meeting vote and Amazon's statement in response to the vote.

GET IN TOUCH        Contact CoStar News Team:   News@CoStar.com

 Find us on 

Welcome To CoStar's
Industry-Focused,
Award-Winning News

Winner of three Journalism Awards from the National Association of Real Estate Editors (NAREE)

Award-Winning News