Seattle Mayor Jenny Durkan is proposing a smaller “head tax” on the city’s largest businesses instead of controversial legislation currently under consideration by the City Council. Durkan’s office confirmed the alternative proposal to GeekWire Thursday evening.
Durkan’s proposal would tax Seattle’s top-tossing businesses $250 per employee each year, rather than the approximate $500 in the current plan that the Council is set to vote on Monday. Durkan’s tax would expire after five years if not renewed, rather than replacing it with a payroll tax in 2021.
The smaller head tax has support from City Councilmembers Bruce Harrell, Sally Bagshaw, Rob Johnson, and Debora Juarez. There are five councilmembers who support the existing tax proposal.
The existing proposal would levy a 26-cent tax per employee for each hour worked at companies with at least $20 million or more in annual revenue. That comes out to approximately $500 per employee each year. The city says the tax would raise about $75 million per year for affordable housing and homeless services.
The polarizing plan has sent shockwaves through the tech community over the past two weeks.
Last week, Amazon paused construction on a 17-story skyscraper pending the City Council’s vote on the tax. Amazon is also considering sub-leasing its massive Rainier Square office project to another company, rather than occupying it itself. The combined projects would house more than 7,000 new Amazon employees.
Monty Anderson, Executive Secretary of Seattle Building Trades, told KING 5 that Amazon would resume construction on the office tower it paused if Durkan’s plan moves forward. Anderson says that is based off of a conversation with Amazon Thursday.
Until Thursday, Durkan had not taken a side in the head tax debate because of the tricky political situation it put her in. Friday morning, the City Council’s finance committee will meet to discuss the proposal ahead of the final vote, which is planned for Monday.
“From the beginning, I’ve believed that there was a path forward to lift up those left behind while protecting jobs,” Durkan said in a statement. “I’ve heard from thousands of constituents, hundreds of businesses of all sizes, dozens of unions, and advocates, and we share the same goals: keep a strong economy, help the thousands of people experiencing homelessness and make Seattle affordable for residents, artists, and businesses of all sizes. ”
The existing head tax proposal would raise about $75 million a year, with 75 percent dedicated to building affordable housing and the remaining dollars funding homeless services. Many in the business community say they aren’t comfortable with that price tag because there isn’t enough transparency into how the city’s existing $63 million annual homeless services budget and other voter-approved dollars are spent.
But a new report out this week suggests that number is still far too low. The study concluded that it would require about $400 million a year, conservatively, to solve the homelessness crisis in King County.
Councilmember Kshama Sawant, an ardent advocate for what she calls “Tax Amazon legislation” called Durkan’s plan “yet another grim reminder why working people cannot rely on corporate politicians,” in a statement provided to GeekWire.
“It’s critical that our movement stand strong and demand no backsliding from the City Council on the $75 million ordinance,” Sawant said. “We reject the so-called ‘sunset clause’ that would put the burden on working people to defend the tax against big business in five years. We demand the majority of the funds be used to permanently house people with publicly owned affordable housing.”