Tax

Seattle Businesses Decry Proposed ‘Head Tax’

Over 100 companies signed a letter opposing a tax that would fund homelessness programs, but an Amazon executive called it "super-dangerous."
Matthew HellerMay 10, 2018
Seattle Businesses Decry Proposed ‘Head Tax’

Seattle-based companies including Alaska Airlines, Redbox, and Expedia have joined a chorus of opposition to the city’s proposed “head tax” on large businesses to fund programs for the homeless.

Top executives from a total of 131 companies signed an open letter to city council members that said the tax would punish job creators rather than address the problems of rising housing costs and homelessness Seattle is experiencing as a result of rapid growth.

Only companies generating at least $20 million in revenue a year would be affected by the tax. They would pay a levy of 26 cents per working hour for each Seattle employee, or roughly $540 a year for every full-time staffer.

Instead of a strategic plan to address growth, the council has proposed to tax only 3% of our city’s largest business[es],” the letter said, adding, “This is like telling a classroom that the students who do the most homework will be singled out for detention.”

Seattle skyline“We oppose this approach, because of the message it sends to every business: if you are investing in growth, if you create too many jobs in Seattle, you will be punished,” the companies said.

Amazon, Seattle’s largest private employer, did not sign the letter. But Amazon Web Services CEO Andy Jassy suggested the city would be better off “working with the business community.”

“I would say that things like the head tax in Seattle are super-dangerous for cities to implement,” he told CNBC. “What company is going to want to start [in] — or move to or grow in — a city that penalizes them for hiring full-time employees?”

The city of Seattle does not impose an income tax on businesses or individuals.

Supporters say the head tax will address the homelessness emergency by creating more affordable housing, with about 75% of the proceeds going toward construction of an additional estimated 1,780 housing units over the next five years.

Organized labor groups have sent a letter to the Seattle City Council in support of the proposal, which is scheduled for a council vote on Monday.