Internet Explorer 11 is not supported

For optimal browsing, we recommend Chrome, Firefox or Safari browsers.

Amazon Backlash Spurs Seattle City Council to Repeal 'Head Tax' Just Weeks After Approving It

In a stunning reversal without parallel in Seattle's recent political history, the City Council voted 7-2 Tuesday to repeal a controversial head tax on large employers like Amazon.

By Daniel Beekman

In a stunning reversal without parallel in Seattle's recent political history, the City Council voted 7-2 Tuesday to repeal a controversial head tax on large employers like Amazon.

Mayor Jenny Durkan plans to sign the repeal into law.

The vote, ending a raucous special meeting called by Council President Bruce Harrell, came less than a month after the council voted 9-0 to approve the tax of $275 per employee, per year to help fund housing and services for homeless people.

The move also came as a business-backed campaign to kill the tax prepared to submit petition signatures this week to qualify the referendum for the November ballot.

People on both sides of the head-tax debate packed the council chambers, waving signs with the slogans "Tax Amazon" and "No Tax on Jobs." As the council members voted, they were drowned out by activists who chanted, "Housing is a human right."

Before the tally, Councilmember Lisa Herbold said she felt like crying but would side with the majority of her colleagues because the Seattle Metropolitan Chamber of Commerce had managed to persuade "the vast majority" of voters to oppose the tax.

Herbold said she lost hope over the weekend after seeing poll results and talking with advocates. Better to retreat now rather than see voters cancel the tax in November after a bitter, monthlong struggle, she said.

"This is not a winnable battle at this time ... The opposition has unlimited resources," she said, drawing jeers from some in the crowd who wanted to fight on.

Harrell and Herbold joined council members Mike O'Brien, Sally Bagshaw, Rob Johnson, M. Lorena González and Debora Juarez in voting for the repeal.

For Seattle leaders, the vote amounts to an embarrassing about-face. Only a few weeks ago, Durkan and council members were hailing the tax as an important step in the city's response to a homelessness state of emergency declared in 2015.

They didn't count on how quickly business leaders would mount a big-money referendum campaign and apparently misjudged how many ordinary voters would support the effort out of frustration with City Hall's handling of homelessness.

Now the mayor and council members have no backup plan to raise the about $47 million per year the head tax would have collected from about 600 companies -- those grossing at least $20 million a year.

A regional panel on homelessness that includes business representatives, called One Table, has so far failed to come up with an alternative funding strategy.

"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 (and) philanthropy," Durkan said in a statement.

For Amazon and some other large companies that would have paid the tax and that have been funding the referendum push, Tuesday's action represents a victory.

In a statement, Amazon spokesman Drew Herdener called the repeal "the right decision for the region's economic prosperity," adding "we are deeply committed to being part of the solution," citing Amazon's investments in local nonprofits. In an email thanking its members for applying pressure, the Downtown Seattle Association wrote, "You did it!"

Also pleased are residents with doubts about City Hall's effectiveness, many of whom have volunteered for the referendum campaign. Though Seattle has greatly increased its spending on homelessness in recent years, the problem has only grown.

But the repeal is a blow for social-justice activists, homeless-services providers and homeless people who spent months lobbying for the tax, citing the severity of Seattle's homeless crisis. Thousands of Seattle Public Schools students were homeless last year, and a record 169 people died on the streets of King County in 2017.

Proponents of the tax say homelessness has grown because rents and home prices have soared. They say Amazon and other large companies can afford and need and to do more to help because the city's tech-industry boom has driven up those housing costs.

The Seattle-based e-commerce giant employs about 45,000 people in the city and was a target partly because CEO Jeff Bezos is the richest person in the world.

The council estimated the tax would help the city build several hundred units of low-income housing, open more shelter beds and provide sanitation at encampments.

Washington's tax system has been rated the most regressive in the nation, and a Seattle income tax on wealthy households was recently ruled illegal in state court.

Anitra Freeman, whose Women in Black group pays respects to people who die on the streets while homeless, described herself as heartbroken Tuesday.

"I thought we had at least five courageous people on the City Council -- and I was wrong," she said at a rally with Councilmember Kshama Sawant before the meeting.

Sawant and Councilmember Teresa Mosqueda were alone in voting against the repeal, which Sawant called a "cowardly betrayal." She condemned the action as bowing down to big businesses and as coming with "lightning speed" and "zero accountability" to working people.

The city's notice to the media about Tuesday's special meeting came less than 24 hours in advance, violating a requirement under state law for such meetings.


"I do not see a path"

Mosqueda slammed the Chamber for boycotting stakeholder discussions earlier this year and accused Amazon of extending an "empty handshake." The company pressured city leaders to scale back the council's initial $500-per-head tax proposal, only to turn around and immediately pledge $25,000 to the referendum campaign.

Promising to keep working on the issue and inviting business executives to join her, Mosqueda said officials must make a better case for what the city is funding. Some 3,000 people were moved out of homelessness in the first quarter of 2018, she said.

Adding drama to Tuesday's proceedings, activists rang a gong 6,320 times -- once for each person tallied as unsheltered in King County on a January night this year.

The council's seven district seats will be up for election next year, as constituents on both sides of the tax debate noted during an hour of public comment before the vote.

Referring to a recent meeting in Ballard where head-tax critics shouted at O'Brien, one commenter challenged the council member, "Are you hearing us now?"

Many remarks were impassioned, with some who went to the microphone attacking the council members as spineless and vowing to vote them out at the next opportunity.

"In my heart, I just feel like crying," commenter Linda Soriano told the council. "Please do not repeal this tax ... Without it, where else can we get the money?"

Though O'Brien described the head tax as the "best tool that we have" to combat homelessness, "I do not see a path" to win at the ballot, the council member said, basing his calculations on conversations with voters.

"I can't tell you how hard it is for me to say that publicly," he told the crowd.

A ballot-measure battle would have been tough. Construction-worker unions opposed the head tax last month, while service-worker unions backed it.

Yet Sawant said the council should not have quit so easily. "We should have the confidence we can change the minds of other working people like ourselves," she said.

Uwajimaya supermarket's Denise Moriguchi was among those urging the repeal, warning about grocery-price hikes and other unintended consequences.

But the council's abrupt U-turn struck even some critics of the head tax as puzzling and left people on both sides wondering about whether to trust their officials.

Elisabeth James of the group Speak Out Seattle collected signatures for the referendum campaign because she thought the debate should go to the ballot.

"I'm confused why they flip-flopped," she said. "We would have welcomed a vote."

(While The Seattle Times Company would have been affected by the head tax, and the editorial board has commented on it, The Times' news coverage is separate from those functions and remains independent.)

(c)2018 The Seattle Times

Caroline Cournoyer is GOVERNING's senior web editor.
Special Projects