Redfin CEO Glenn Kelman weighed in on Seattle’s controversial new head tax Tuesday, offering a sober perspective amid vitriolic responses to the legislation. He explained why Redfin didn’t join a petition to block the proposal even though he thinks the head tax is “unreasonable,” and he offered an alternative approach in a blog post.
Kelman doesn’t support the $275-per-employee tax that will be levied on companies with more than $20 million in revenue each year, but he recognizes that industry hasn’t given the city many options. He says business should be willing to “step up” and fund programs to fight homelessness if necessary but taxes should be a last resort. Kelman believes Seattle’s widespread single-family zoning is a bigger barrier to addressing homelessness than a lack of funding for city programs.
“Simply opposing every tax won’t work,” he said in the blog post. “Before Redfin was asked to sign this year’s anti-tax petition, we were asked to sign another, opposing a state-wide income tax on wealthy folks in 2010. The business community also fought the city on a legally dubious income tax in 2016. We did not join either of those efforts. Redfin’s execs feel that now that the business community has blocked a reasonable statewide tax, we can’t be surprised the city is proposing unreasonable taxes instead.”
Seattle estimates that the tax in question will generate about $48 million each year to build affordable housing and fund homeless services. The tax will last five years, at which time the City Council will evaluate whether or not to renew it.
Kelman thinks the tax puts the cart before the horse. Single-family homes take up 69 percent of Seattle’s residential land plots, a bigger percentage than other rapidly growing cities. Kelman — the leader of a high-tech real estate brokerage that relies heavily on data — believes this is the primary driver of the city’s housing affordability crisis.
“The amount of housing the city can build with a head tax, or any tax, is nominal,” he said in the blog post. “The change that can make a major difference is to neighborhood zoning, which will lead to more home-building.”
He recognizes that its no easy sell. Homeowners fiercely defend the classic single-family Seattle neighborhoods that have defined the city for generations.
But the alternative is worse: a city where people resent the economic success of those who can afford to live here, where police officers and teachers can’t live in the communities they serve, where traffic and long commutes are the norm because people have to move further and further away to afford housing.
Seattle has been the hottest housing market in the nation for 18 straight months, with median sale prices approaching $820,000. Kelman’s blog post Tuesday comes just a week after he blasted the state of the national housing market on an earnings call. He blamed a historic shortage of homes for sale for skyrocketing prices creating a “landlord nation,” not just in tech-heavy cities like Seattle and San Francisco.
Kelman said Redfin, which became a public company last year, would support a Seattle tax on corporate or personal income but only after widespread re-zoning. It’s a symbolic stance at this point; the City Council unanimously approved the legislation Monday, which makes it veto-proof. Even if it weren’t, Mayor Jenny Durkan said she plans to sign the tax into law. But Kelman said his team did try to engage in the conversation before the vote.
“We’ve tried contacting our city council members, now and over the past year, to ask what we could do to support an equitable Seattle,” he said. “No one has returned our calls or emails.”