Amid backlash from companies like Amazon and Starbucks, the Seattle government officials who backed a business tax to pay for homeless services earlier this year said they would move to repeal it.
Under the law, businesses that made more than $20 million in yearly revenue would be forced to pay a $275 tax per full-time worker. Seattle intended to use the nearly $50 million in extra money to help fund affordable housing and other initiatives for a growing population living in so-called tent cities.
Facing a November ballot initiative from opponents trying to revoke the law, however, Seattle Major Jenny Durkan and seven city council members, including president Bruce Harrell, changed course to avoid a prolonged and costly political battle.
“The city remains committed to building solutions that bring businesses, labor, philanthropy, neighborhoods and communities to the table,” they said in a statement. “These shared solutions must include a continued focus on moving our most vulnerable from the streets, providing needed services and on building more housing as quickly as possible.”
The law spurred major opposition from top national businesses with operations in the city. In advance of the successful May vote on the measure, Amazon halted planning on a new 17-story office building, though it later resumed work. Other Seattle-based companies such as Starbucks also said they were concerned about the bill and questioned whether Seattle could handle the new revenue responsibly.
“This city continues to spend without reforming and fail without accountability, while ignoring the plight of hundreds of children sleeping outside,” John Kelly, senior vice president of global affairs and social impact at the coffeehouse chain, said in May. “If they cannot provide a warm meal and safe bed to a 5-year-old child, no one believes they will be able to make housing affordable or address opiate addiction.”
Spokespersons for Amazon and Starbucks did not immediately respond to requests for comment.
The Seattle Metro Chamber called the city’s change of position a “breath of fresh air” and said it would work with the federal and state governments to address issues impacting affordable housing.
“Repealing the tax on jobs gives our region the chance to addresses homelessness in a productive, focused and unified way,” the group’s president, Marilyn Strickland, said in a statement. “From day one, the Seattle Metro Chamber has been clear that a tax on jobs is not the way to address the regional homelessness crisis. Our business community is ready to work on solutions — from employment to technological innovation to housing.”
In the aftermath of the 2008 recession, metropolitan areas across the country have been struggling with larger homeless populations. Several cities have enacted tax hikes to pay for support for impoverished residents: Miami, for example, charges a 1 percent levy on restaurants that serve alcohol and make more than $400,000 a year.
A repeal of Seattle’s law could dissuade other cities from pursuing similar measures. Philadelphia, for example, is considering a 1 percent tax on construction to pay for affordable housing. The city is one of 20 in the running to serve as the location for Amazon’s second headquarters and local executives are raising concerns that the measure could undermine its bid.
