Why Seattle said no to head tax

In 2018, Seattle City Council both approved and later repealed a head-count tax that would charge large-grossing businesses with an additional per hour tax rate based on the number of employees. The short lived tax set an upper limit of $275 on the total amount that could be taxed per employee per year, which briefly caused Amazon to pause their estimated potential expansion of 7000 new employees within the Seattle region. According to City Limits, a nonprofit news organization, “the tax revenue would have gone towards building affordable housing and providing services for the homeless.”

The “No Tax on Jobs” campaign became the catalyst and central voice for Seattle businesses opposing the head tax, with representatives from companies outside of Amazon and Starbucks questioning the efficacy of the tax money creating real change at the potential cost of employees’ salaries and benefits. City Limits delves into further detail about the head tax and what dissuaded Seattle City Council from continuing imposing the tax on businesses:

“The new legislation proposed the tax would be levied on businesses that have at least $20 million in annual taxable gross revenue. For those companies, the proposed tax applied to all of its Seattle employees at a rate of 26 cents per hour for 2019 and 2020, with the annual bill per employee capped at $275 per employee. “In May [2018], Seattle’s nine-member City Council unanimously passed the head tax legislation and it was signed into law.

“Less than a month later, the head tax legislation was repealed by a 7-2 vote after several businesses and corporations launched the “No Tax on Jobs” campaign throughout the city. Campaign leader Saul Spady, a local Seattle businessman, said the city government needed better policies to address homelessness. Part of the repeal push was an announcement by Amazon that the company would halt construction on an expansion that would have lead to an estimated 7,000 jobs, according to the Seattle Times. Another CityLab article, revealed that the campaign to repeal was largely funded by big corporations such as Starbucks and Amazon.”

In The Seattle Times, Spady suggested an alternative, free market solution to how Seattle can increase housing supply and solve its homelessness challenges: 

“The city owns an extraordinary amount of land. What if the city zoned all the land within a half mile of our light rails for high density dorm style housing where developers could build that building and let’s say get the KeyArena deal – a 50-year affordable lease – and they would build the housing that goes there. The rule would be they give the bottom one or two stories to a service provider like Mary’s Place. And lo and behold, I bet you we would have 10K affordable units in the city of Seattle.”
--by Will Newcomb, Opportunity Now Web Editor and class of 2019 Santa Clara University graduate, where he studied bioengineering.