Amazon will resume construction on a Seattle skyscraper in the wake of the City Council’s decision to tax its top-grossing businesses $275 per employee, per hour worked, each year. But the company is “very apprehensive” about its future in its hometown because of “hostile approach and rhetoric toward larger businesses.”
For the past few weeks, the city has been considering a $500 “head tax” on businesses with more than $20 million in annual revenue, a price tag that led Amazon to pause construction on its Block 18 office tower and reconsider whether it will move into the massive Rainier Square office complex. On Monday, the city unanimously approved a smaller version of the head tax — also sometimes referred to as the “Amazon tax.”
Amazon issued the following statement, from Vice President Drew Herdener, in response to the vote:
We are disappointed by today’s City Council decision to introduce a tax on jobs. While we have resumed construction planning for Block 18, 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. City of Seattle revenues have grown dramatically from $2.8B in 2010 to $4.2B in 2017, and they will be even higher in 2018. This revenue increase far outpaces the Seattle population increase over the same time period. The city does not have a revenue problem – it has a spending efficiency problem. We are highly uncertain whether the city council’s anti-business positions or its spending inefficiency will change for the better.
A source familiar with Amazon’s plans tells GeekWire that the company is still evaluating whether or not it will occupy the massive Rainier Square office tower that’s underway. Amazon may sub-lease the building to another company instead of moving in.
Under the amended tax, Amazon will be on the hook for about $11 million annually, rather than the $20 million that the original proposal would have levied.
The tax that passed Monday will raise $45 to $49 million annually to fight Seattle’s homelessness crisis. The Council’s spending plan allocates 60-70 percent for affordable housing and the remaining funds will go toward shelters and other homeless services. The tax expires after five years with the option to renew it.
When asked about Amazon’s negative reaction to the response at a press conference following the City Council vote, Durkan said she stands by the legislation.
“I am quite confident that as we move forward, we can continue to have the best city anywhere for people to do business … this is the city where their workers are going to want to be and that’s why they’re going to want to be here,” she said.
Seattle Councilmember Kshama Sawant and her supporters have brandished signs that say “Tax Amazon” and “Stand Up to Amazon Greed” at City Council meetings and demonstrations supporting the head tax. Sawant was the only councilmember to vote against cutting the per-employee cost from $500 to $275 at Monday’s meeting.
Underscoring Amazon’s battle with its hometown is the company’s search for a second headquarters in another North American city. Amazon says it is looking for a city with “a stable business climate for growth and innovation” in its HQ2 criteria.