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Amazon Crushes a Small Tax That Would Have Helped the Homeless
Seattle quickly walked back a tax on major businesses that would have raised money for affordable housing after Amazon threatened to stop construction in the city.
By Alex Wong/Getty Images.
Having conquered the e-commerce world, Amazon has begun throwing its weight around in politics. Jeff Bezos, the wealthiest person in the world with a net worth of some $140 billion, is building a small palace in Washington, D.C., and has increased the money Amazon spends on lobbying fivefold in five years. Local politicians, eager for a piece of Bezos’s largesse, have taken notice. When Amazon announced plans for a second headquarters in some lucky U.S. (or Canadian) city, metropolises across the country offered themselves up, sparking a tax-incentives arms race. The mayor of Kansas City tried to stand out by buying and reviewing 1,000 products on Amazon; the city of Birmingham installed sculpture-size Amazon boxes around town, as well as giant versions of Amazon’s popular Dash buttons, which it has used to send Amazon hundreds of tweets, including this one: “Amazon, we got a 100% match on Bumble. Wanna go on a date?” But while other cities continued to grovel, Amazon found itself engaged in a pitched political battle with its hometown: Seattle.
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The issue was a $275-per-employee tax on large employers in the city, passed last month to help alleviate the city’s spiraling homelessness crisis. Seattle, like other cities that have experienced a tech boom, has seen skyrocketing housing and rental prices, driven by the influx of highly paid tech workers. The tax would have targeted businesses making at least $20 million in gross revenue, beginning in January, with the goal of raising some $50 million annually to help keep people off the streets.
This, as it turns out, was a bridge too far for Amazon, Seattle’s biggest employer, which has a market value of some $800 billion. Amazon and other major employers in the city vocally opposed the tax. While Amazon typically stays quiet when it comes to Seattle politics, the company played hardball with the city council, saying that while the council considered the tax, it would temporarily pause construction on a high-rise near its headquarters in protest. “I can confirm that pending the outcome of the head-tax vote by city council, Amazon has paused all construction planning on our Block 18 project in downtown Seattle and is evaluating options to sublease all space in our recently leased Rainier Square building,” Amazon Vice President Drew Herdener told The Seattle Times in May. “Our firm was notified late in the day yesterday to pause the project pending the resolution of the head-tax issue that the city council is currently deliberating, so we are suspending our work immediately on the project based on that direction,” architect Peter Krech at Graphite Design Group, which designed Amazon’s Block 18 tower in downtown Seattle, told the Times, seeming to confirm that whether Amazon was for real or merely playing hardball, it had halted construction. “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,” Amazon’s Herdener commented last month after the tax passed. A group of businesses calling themselves the “No Tax on Jobs” campaign began gathering signatures in a bid to put a repeal referendum on the ballot this November.
On Monday, Seattle caved. “It is clear that 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,” Mayor Jenny Durkan and seven city council members said in a statement announcing plans to repeal the tax.
The coalition is happy the “Seattle City Council has heard the voices of the people loud and clear and are now reconsidering this ill-conceived tax,” John Murray, a spokesman for the No Tax on Jobs campaign, said in a statement. Other council members were angry to see the city capitulate to Amazon. Councilwoman Teresa Mosqueda, who was one of four sponsors of the tax, said she couldn’t support a repeal without “a replacement strategy to house and shelter our neighbors experiencing homelessness.” Amazon did not immediately respond to a request for comment.
Mayor Durkan’s surrender is doubly remarkable given the strides Seattle has made toward addressing inequality in the city. Facing one of the fastest-growing income gaps in the United States, with the top 20 percent of earners in Seattle pocketing more than half the city’s total income, the city recently implemented a $15-per-hour minimum wage, and spent $68 million on combating homelessness last year. But Seattle’s inability to stand up to its largest businesses, including Amazon and Starbucks—another Fortune 100 company with net revenues of around $6 billion a year—reveals the long odds municipalities face when asking local corporations to help repair the social fissures they have left in their wake. “The onus is very much on those who fought so hard against this solution to identify a better one,” Lisa Daugaard, a member of a Seattle city task force, told the Times this week. “Or admit they’re O.K. with the city having shanty towns and favelas in our public spaces indefinitely.”
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