Seattle repeals head tax 7-2 in dramatic reversal that leaves city divided over homeless crisis

Supporters of the head tax rush to the front of the City Council chambers during a vote to repeal the controversial legislation. Behind the banner, Councilmember Kshama Sawant calls for order. (GeekWire Photo / Monica Nickelsburg)

Seattle’s new per-employee tax on large businesses to fund affordable housing is officially dead, bringing an end to one of the most polarizing debates in city history. The City Council voted 7-2 to repeal the so-called head tax during an emotional and tense meeting Tuesday afternoon. Councilmembers Kshama Sawant and Teresa Mosqueda were the only two that voted against repealing the controversial tax.

In tortured remarks, Councilmember Lisa Herbold expressed regret over the repeal but said that polling data over the weekend revealed an insurmountable fight. She said that the Council doesn’t have the capacity to out-fundraise the “No Tax on Jobs” campaign, which was pursuing a ballot initiative that would have left the head tax’s fate up to voters in November.

“This is not a winnable battle,” she said.

Councilmembers Lisa Herbold and Rob Johnson listen to Councilmember Teresa Mosqueda’s entreaty not to repeal the head tax. (GeekWire Photo / Monica Nickelsburg)

Sawant, a socialist and ardent supporter of the head tax, disagreed.

She implored her colleagues to “stand strong on the Amazon tax today and pool our efforts as elected representatives, stand with the movement, stand with the people, and spend the summer and fall really changing public opinion.”

Councilmember Kshama Sawant holds a press conference in advance of Tuesday’s meeting. (GeekWire Photo / Monica Nickelsburg)

In a series of heated meetings on the head tax, Tuesday’s stood out as particularly explosive. As the Council prepared to vote, supporters of the tax crowded in front of the Council holding a massive banner reading “Tax Amazon” and chanting. The Council inaudibly carried out the vote behind the protestors and left the chamber amid chants and chaos. Speakers were often shouted down during public comment with curses and chants and members of the audience were escorted out by security for being overly disruptive. The crowd erupted in shouts of “repeal Bruce Harrell” when the Council president attempted to move on from public comment to deliberation.

In a statement, Amazon applauded the vote and indicated a willingness to move forward with its hometown.

Council President Bruce Harrell. (GeekWire Photo / Monica Nickelsburg)

“Today’s vote by the Seattle City Council to repeal the tax on job creation is the right decision for the region’s economic prosperity,” Amazon VP Drew Herdener said in the statement. “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.”

Seattle Mayor Jenny Durkan will sign the repeal into law.

“Everyone in this city shares similar goals – we need to build more affordable housing, provide mental health and behavioral health services, and bring people off the streets and into safer spaces while continuing to support our small businesses, jobs, and economy,” she said in a statement. “We have been hard at work on these challenges and will continue our efforts. To be successful, everyone needs to be part of the solution. Instead of engaging in a prolonged, expensive political fight, the City and I will continue to move forward on building real partnerships that align our strategies from businesses, advocates, philanthropy.”

Seattle entrepreneur Steve Murch, who gathered signatures for the “No Tax on Jobs” petition, attempted to address the Council and call for more fiduciary responsibility in the homelessness fight but was interrupted by shouts from the crowd. The confrontation appeared to rattle Murch, who ended his remarks with an emotional, “I love this city and I want it to be better. I want us to prioritize this problem.”

Tuesday’s vote is the final twist in the head tax’s winding and tumultuous journey. An early iteration of the tax was voted down in 2016 then resurrected this year with a vengeance. The tax’s supporters sought to charge businesses with more than $20 million in annual revenue about $500 per full-time employee. That’s when Amazon put its foot down.

Amazon says Seattle head tax repeal ‘is the right decision for the region’s economic prosperity’

Amazon paused construction on its Block 18 office tower and said it was reconsidering moving into the massive Rainier Square development, pending the city’s vote. Mayor Durkan stepped in and brokered a compromise, bringing the tax down to $275 per employee. The Council unanimously approved the plan. Amazon resumed construction on Block 18 but is still weighing its options for Rainier Square, bemoaning Seattle’s “hostile approach and rhetoric toward larger businesses.”

Amazon, Vulcan, and Starbucks each donated $25,000 to the “No Tax on Jobs” campaign.

“We welcome this move by the City Council and believe the best path forward is to implement the reforms recommended two years ago by the city’s own homelessness expert,” Starbucks public affairs lead John Kelly said in a statement. “Starbucks remains a committed partner to government officials, business leaders, and family service providers.”

Starbucks plans to convene those stakeholders for a summit Tuesday, June 19 to discuss solutions to the homelessness crisis.

The “No Tax on Jobs” campaign was preparing to turn in a petition with 45,833 signatures — more than double the requirement — when Harrell announced the special meeting Monday afternoon.

Homeless service provider Andrew Croak. (GeekWire Photo / Monica Nickelsburg)

“These organizations like Amazon and Vulcan had the opportunity to be a part of the political process,” said Andrew Croak, a housing assistance case manager with the Downtown Emergency Service Center, at City Hall Tuesday before the special meeting. “At the time, they chose not to and we can see very clearly why, because they felt that they don’t need to. I am not certain how they’re going to partner but I think that it is an obligation now that they decided to weigh in on this issue, to bring something to the table that is a real solution.”

Now Seattle is back where it started but the tensions inflamed by the debate won’t disappear as quickly as the short-lived tax. Affordable housing advocates accused the city of capitulating to pressure from Amazon and the business community during Tuesday’s meeting.

What’s more, the City Council’s surprise turnaround is not likely to engender trust in its efficacy to govern Seattle, an issue raised repeatedly during the head tax battle. The Seattle Metro Chamber of Commerce and many in the tech industry repeatedly called the Council an irresponsible steward of taxpayer dollars as the homelessness crisis has grown.

“The truth is that regardless of where the funding comes from, what’s missing is a plan to spend in a way that will have a real impact,” said Aaron Holm, a former Amazon employee and founder of Blokable. His startup builds modular homes with a mission to increase access to housing in low-inventory cities like Seattle.

Herbold challenged the notion that the city is not addressing the homelessness crisis, accusing the business community of peddling a false narrative. “The Chamber of Commerce has convinced the vast majority of Seattleites … that increased human suffering in this city is a result of government inefficiency,” she said during the meeting.

Seattle Chamber CEO Marilyn Strickland said the repeal gives the region “the chance to move forward in a productive, focused, and unified way on the homelessness crisis,” in a statement.

“From day one, the Seattle Metro Chamber has been clear that a tax on jobs is not the way to effectively address this crisis,” she said.

Although hundreds of businesses would be affected by the tax, Amazon is was explicit target of Sawant and her supporters during the head tax debate. Sawant held a press conference ahead of Tuesday’s meeting accusing her colleagues of bowing to pressure from Amazon.

“This is a capitulation and a betrayal and it’s kowtowing to big business,” she said.

The head tax is divisive even within Amazon.

Amazon employee Aubrey Pullman spoke out in favor of the tax during the public comment period of the meeting.

“It’s unacceptable to me that we have such a housing shortage,” he said. “We need a heavy amount of rezoning. We need lots of affordable housing to be built and if it means that I have to get a different job because Amazon moves, I will take that.”

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