Business should pay its fair share in Seattle

May 21, 2018

Steve Leigh reports on the results of a campaign to win a tax on large corporations in Seattle to reduce homelessness — and how politicians caved to pressure from Amazon.

AFTER HOURS of public hearings and discussions, the Seattle City Council voted May 14 to approve a modified “head tax” on the largest corporations in the city to fund homeless services and new “deeply affordable” housing.

The tax is specifically designed to target Amazon, the largest company in Seattle, which fought the proposal tooth and nail.

The legislation was the result of a citywide movement. Last fall, after a sleep-in at City Hall, the City Council was still only prepared to pass a measure that would have generated $20 million — a woefully inadequate amount to meet low-income housing needs.

After the Progressive Revenue Task Force released its proposal for a much larger head tax, the movement took off with rallies and occupations of City Council chambers, which led in one instance to the forcible clearance of the chambers by police.

On May 11, a City Council committee passed a proposal that would have generated $75 million in funding, based on a tax of $500 per employee per year from approximately 600 large corporations — 3 percent of the city’s businesses.

Protesters demand taxes on Amazon and other large corporations in Seattle
Protesters demand taxes on Amazon and other large corporations in Seattle (Rick Barry | flickr)

That was eventually watered down, though. In the final measure signed by Mayor Jenny Durkan, large corporations will only pay $275 per employee, dropping the total amount of funding to $48 million. The new measure will go into effect on the first day of next year.

RESISTANCE WAS strong from the business community. Jeff Bezos, the CEO of Amazon and the world’s richest person, suspended construction on two buildings in downtown Seattle, jeopardizing 7,000 construction jobs, in a push to defeat the tax.

Even after reportedly securing the lower head tax amount in a backroom deal with the mayor, Amazon publicly opposed even that. A company statement claimed that Amazon would have to “re-evaluate” its relationship to Seattle in light of the new tax (Amazon did, however, restart construction on its new downtown buildings after the mayor signed the smaller tax).

Other businesses followed Amazon’s lead, denouncing the tax as a “job killer.” They claimed to be concerned with homelessness, but opposed to “this tax” as a way of doing something about it. But every tax that’s proposed is denounced as the “wrong” tax. Business has never come up with a “right” tax to alleviate homelessness or the crisis in affordable housing.

In spite of this opposition, there is capitalist concern about homelessness — but it’s not because of humanitarian motivations.

Small retail businesses in particular are worried about the homeless sleeping in their doorways and otherwise “disrupting” business. Ironically, this concern added to some of the momentum for the tax proposal, with some small businesses actually supporting the tax.

Other opposition to the head tax was centered in the Ballard neighborhood — a formerly working-class but rapidly gentrifying area. Many homeowners there say they are tired of seeing the homeless on “their” streets and even oppose legally sanctioned encampments.

At one point, Ballard residents took over a town hall meeting, where City Council member Mike O’Brien tried to explain the first tax proposal. The residents spouted hatred against the homeless, but offered no solutions.

Opposition to the new tax could come from the Washington state Legislature. A Republican legislator has announced he will introduce a bill to override the Seattle tax by prohibiting cities from passing such laws. The legislature does not meet again until next January, so it is unclear if this will have any impact.

THE NEW tax will only make the slightest dent in the “homelessness state of emergency” declared in Seattle in in 2015.

A recent report originally by the Chamber of Commerce said that King County, including Seattle, would need to spend $400 million annually to seriously address the crisis — some $200 million in Seattle alone.

The committee’s proposal to generate $75 million through the corporate head tax would only have produced a third of what was needed. The final version would generate less than a quarter of the needed amount.

The weekend before the final vote, four of the original sponsors of the $75 million proposal caved to pressure from Mayor Durkan, who threatened a veto of the original proposal. The deal was struck before the public hearing on May 14, where the City Council listened to testimony, but had already decided to vote for the amended proposal by an 8-to-1 vote.

Only socialist City Council member Kshama Sawant opposed the amendment reducing the tax. While she voted for the final bill after it was amended, Sawant also proposed prohibiting the use of any of the new money for sweeps of homeless camps. Her proposal was defeated by an 8-1 vote.

The withdrawal of the four progressive City Council members — O’Brien, Teresa Mosqueda, Lorena González and Lisa Herbold — from supporting the higher proposal is illustrative of the limits of even progressive Democratic politicians. They were unwilling to take the fight to the mayor or to mobilize a broad popular campaign that could have provided support for the $75 million proposal.

Although they gave ringing declarations of their commitment to fighting homelessness, they cited “practicality” as the reason for caving in to business and Mayor Durkan — with promises to fight for more in the future.

Activists who had fought for the initial proposal were disappointed, but not surprised by the compromise.

Noting that this broad head tax could be a foot in the door to future efforts to increase funding for homelessness, activists noted that they had scored an important victory in raising the amount available for homeless services and housing from the $20 million proposed last fall to the $48 million now.

As the Transit Riders Union, one of the main groups behind the measure, said in a statement:

This afternoon, the City Council passed legislation raising $48 million per year for housing, shelter, and services, through a tax on Seattle’s largest businesses. Is this bill everything we hoped for? No. Is it a major step forward? Absolutely.

Today is a huge victory for the Transit Riders Union, the Housing for All Coalition, and many other organizations and individuals who have worked so hard over the past nine months to bring this legislation from idea to reality.

As this fight shows, mass organizing can work. Without the active campaign for the measure, this increase in homeless funding would not have been possible.

None of the activists are satisfied, however. “We’ll be back for more!” was a common sentiment among many. As long as the homelessness state of emergency exists, so will the Seattle housing justice movement!

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