Amazon’s tax bill has become a lightning rod in a nationwide debate over economic inequity and Seattle is on the front lines. An ambitious new proposal by Seattle City Councilmember Kshama Sawant — a vocal Amazon adversary — raises the stakes.
Sawant, the socialist at the helm of the unambiguously titled “Tax Amazon” campaign, unveiled her plan Wednesday during a news conference at Seattle City Hall. It would implement a 1.7 percent tax on the payroll of Seattle’s 825 largest businesses. The tax applies to the top 3 percent of companies, based on their payroll expenses, Sawant said. It would exempt nonprofits, co-ops, grocery stores, and government and educational employers. Sawant estimates it would raise $300 million annually for affordable public housing and environmental objectives.
The proposal, which hasn’t been written yet, complicates a plan to tax large companies’ payroll at the county level to fund housing and homeless services. That proposal has the support of Amazon, Microsoft, and other businesses, as well as Seattle Mayor Jenny Durkan.
Underpinning both proposals is a dire need to address the housing shortage and homelessness crisis that has confounded officials in the Seattle region for years. Housing shortages are affecting communities across the nation, acutely in tech hubs like Seattle and San Francisco. In those cities, entry-level home prices have increased by more than 75 percent since 2012.
The housing crunch has left-leaning politicians across the country calling for new sources of public funding. Famously liberal Seattle is leading the charge, with its most left-leaning official in the vanguard. Sawant is planning a multi-pronged approach to her Tax Amazon campaign, including pushing for a ballot initiative that would take the issue to the voters. That part of the plan could be in violation of ethics rules, Seattle news blog SCC Insight reports.
“We support all efforts to raise progressive revenue from big business for affordable housing and services,” Sawant said during the news conference. “We’re here after having spent over two years fighting for some version of the Amazon tax, to tax big business to begin addressing this crisis.”
That fight began two years ago with a per-employee tax on Seattle’s top-grossing businesses. The so-called head tax passed unanimously in 2018 but the Seattle City Council repealed it less than a month later, faced with aggressive opposition from the business community.
Many opponents of the head tax, including Amazon, said they would prefer a regional approach to the crisis. Their wish materialized this year in the form of a bill that would allow King County — home to Seattle and other cities — to tax the payroll at large and medium companies. That tax would raise an estimated $121 million annually, according to Durkan’s office.
Legislators are debating whether or not to include a provision in the bill that would prevent cities like Seattle from passing their own measures. Many in the business community would prefer preemption in the final legislation to block proposals like Sawant’s.
“We are absolutely opposed to the so-called preemption,” Sawant said. “We are opposed to the attempt to create a tax shelter for Amazon and other big businesses which they are talking about right now. Because if that happens, we will not be able to put forward what we have proposed today.”
Sawant’s proposal would spend 75 percent of the new funds on building 8,000 government-controlled, affordable homes over the next 10 years. The remaining 25 percent would help convert 47,000 existing homes to electric power as part of Savant’s environmental agenda.
The size of the tax is based on a report by McKinsey Company that estimates it would cost King County between $450 million – $1 billion each year for the next decade to end the homelessness crisis.