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Seattle's 'Head Tax' Is Dead After Pressure From Businesses, Referendum Campaign

Ted S. Warren
AP Photo
People attending a Seattle City Council meeting hold up signs that say "No Tax On Jobs" and "Tax Amazon, Housing For All" Tuesday, June 12, 2018, as the council prepared to vote to repeal a controversial "head tax" on businesses.

In a dramatic reversal, the Seattle City Council voted 7-2 Tuesday to repeal a "head tax" on businesses that it unanimously passed less than a month earlier after pressure from companies like Amazon and Starbucks and a mounting referendum campaign.

Tax opponents and supporters packed Council chambers holding signs that said "No Tax On Jobs" and "Tax Amazon, Housing For All." Nearly 50 people testified during an extended public comment period that was interrupted several times by chants.

The tax was set to raise more than $47 million to build more affordable housing and provide emergency homeless services. It would only have been paid by companies grossing more than $20 million a year.

The head tax debate has ignited Seattle for months. The tax that passed was a last-minute compromise after Amazon paused construction on two projects downtown. The proposal went down from $500 per employee per year to $275 per employee per year.

But a campaign to put the repeal question to voters began almost immediately after it was passed. Companies like Amazon and Starbucks donated big money early on.

The campaign announced just before the Council voted Tuesday that it had gathered more than 45,000 signatures, well beyond the nearly 18,000 needed to put the referendum on the November ballot.

Council members who voted to repeal cited that money and support as the reason for their about-face.

"The opposition has unlimited resources and between seeing lots of polling data and conversations this weekend, the margin is simply too great to overcome," said Councilmember Lisa Herbold.

Councilmember Lorena Gonzalez was one of the sponsors of the legislation. She noted the head tax had been under discussion since last fall's budget process, with a dedicated task force beginning meetings in January. 

She said the process led the council to "make concessions that we never wanted to make, and we made those concessions because we felt that the urgency of how to address the reality that people are dying on our streets needs to be addressed."

But in the end, she joined the majority to repeal the tax. Councilmember Teresa Mosqueda was one of the two nay votes, but she echoed Gonzalez's sentiments.

"Within 48 hours of buying off on the proposal that this council unanimously approved, Amazon turned around and funded the opposition," Mosqueda said. "And I don't care if you're with labor or you're with business, a hollow handshake and a broken promise is not good practice."

Councilmember Kshama Sawant was the other nay vote. She also blasted Amazon, but blamed her colleagues as well.

"It is magical thinking to believe that somehow you will be able to win a tax like this without making enemies out of Jeff Bezos," she said, referring to Amazon's founder and CEO. "No, Jeff Bezos is our enemy."

KNKX 'All Things Considered' Host Ed Ronco talks with reporter Simone Alicea about the repeal of Seattle's head tax.

Head tax supporters at the meeting were upset, emphasizing the urgency of Seattle's homelessness crisis. At various points, they called to "repeal" Council members Bruce Harrell, Sally Bagshaw and Rob Johnson.

The relatively few head tax opponents who testified commended the council for Tuesday's action, but they continued to express frustration with Seattle's approach to homelessness. They also referred to the 2019 district elections.

While many council members and activists expressed a need to work on a next step or plan B, it is not clear what that might look like. 

It's also unclear where this whole episode leaves Seattle in its efforts to fight homelessness, its relationship with its largest private employer, or with voters on both sides growing more and more frustrated with city leadership.

A Seattle native and former KNKX intern, Simone Alicea spent four years as a producer and reporter at KNKX. She earned her Bachelor's of Journalism from Northwestern University and covered breaking news for the Chicago Sun-Times. During her undergraduate career, she spent time in Cape Town, South Africa, covering metro news for the Cape Times.