The Seattle authorities abandoned the new corporate tax bill, which they approved only a month ago, giving the victory to the biggest opponent of the measure – Amazon. The officials also gave warning to the cities that are applied to host the second headquarters of the retailer that the company can cross all borders in an attempt to protect its interests.
The tax would have raise to the treasury about 50 million USD per year to help the homeless people and to finance affordable housing. Since Seattle expanded over the last decade thanks to the growth of Amazon, whose headquarters are there, rents have risen, and a number of residents have suffered from it. The homeless population of the city is the third largest in the country after New York and Los Angeles.
Taxing the successful companies to help alleviate some of the problems caused by their success was a convincing and tempting idea that quickly paved the way for the Silicon Valley. California cities such as Cupertino, East Palo Alto, Mountain View and San Francisco recently surveyed various forms of a basic tax, according to which the big employers in each city would pay a fee to each of their employees.
But in Seattle the idea turned out to be extremely controversial, ending with a crash.
The Seattle City Council canceled the tax with 7-2 votes, accompanied by a serious dispute. A crowd gathered in front of the building, and some of them wore billboards saying, “Tax Amazon, not working people”, while others backed the cancellation. The council members extended the period for discussion in an unsuccessful attempt to try to satisfy all the sides. At least one Amazon employee spoke in favor of the tax, saying, “I want all the people in this city, not just the rich people”.
Less than a month ago, the tax was passed unanimously. It became a law on May 16, after was initialed by Mayor Jenny Durkan, who said the money would “move people out of the street to safer places” and “clean up the rubbish that is in our parks and in our communities”. In her words, the new tax would also provide new resources, including training and health services.
“I know we can be a city that continues to create its future and unite to build a more accessible, inclusive and fair future”, said Jenny Durkan.
Within a few days, this vision has been reversed. Amazon, which had already reduced its initial tax after stopping its expansion plans, joined the protest organizations of other Seattle-based companies, such as Starbucks, Vulcan and local companies for food. All of them said they would fight the law.
The opponents set up the organization “No Tax on Jobs”, aiming to get enough signatures to cancel the vote. On the weekend it became obvious that the measure would succeed, which made the mayor and seven city council members make a statement saying, “We heard you”.
The politicians have no desire for a long-term battle for jobs, even at a time when the unemployment rate in the region is only 3.1%.
“It is clear that the Ordinance will lead to a prolonged, expensive political battle over the next five months that will do nothing to cope with our urgent crisis in housing and homelessness”, added they.
A spokesman for Amazon called the vote “the right decision”. A spokesman for Starbucks said the company supported this move.
The city’s original plan was to collect about 500 USD per employee per year. Amazon responded to the measure in early May by stopping its expansion in the city “awaiting the outcome of the vote on the main tax”. That was enough to reduce the tax to about 275 USD per employee and the fee to shrink in other ways. The tax was limited to companies with revenues of at least 20 million USD per year.
As the largest private employer in the city with more than 45,000 employees, Amazon would initially pay approximately 12 million USD per year – a relatively low price for a company with profit of 178 billion USD last year, and which CEO, Jeff Bezos, is the richest man in the world.
Amazon officials have said the company is not opposed to helping the homeless. But they think Seattle will simply waste the money. The city, according to the company, “has a cost-efficiency problem”.
The retailer chose 20 finalists in January as possible cities for their new second headquarters, a process that generates tremendous attention and interest even on Amazon standards. The concern pointed out that the community, where will be created at least 50,000 new jobs, must be an accumulating partner. Some of the finalists offered extra tax relief.
In recent months, however, there was a resurgence on the belief that what is good for Amazon is inevitably good for its host.
“People lose their homes and are displaced from their communities, although the largest corporations reported record profits and a boom in development”, said Sarah Johnson, director of Local Progress, a national association of progressive elected municipal employees. “Officials across the country pay attention to how Amazon and other corporations meet Seattle’s efforts to deal with the crisis in the property market and the homeless.”
Especially in the Silicon Valley, both problems are developing seriously.
Last week, Mountain View City Council voted unanimously to continue with plans for a new tax in November. Mountain View is home to Google as well as other technology companies. The tax will bring about 6 million USD, half of which will come from Google and will be used for transport projects.