People’s Republic of Seattle Blinked

People’s Republic of Seattle Blinked

People’s Republic of Seattle Blinked

A month ago, Seattle made the news when it passed a “head tax” aimed at helping the homeless. Approximately 500 businesses would be forced to pay $0.14/employee hour to the city. Of course Amazon and Starbucks and the other businesses objected. They also let their objections be known in ways that had the potential of impacting the city’s bottom line. It quickly became a question of who would blink first. That sound you heard yesterday was the sound of economic realists around the country laughing in triumph as Seattle’s city council blinked and repealed the tax.

REUTERS/Gregory Scruggs

The tax was supposed to raise at least $45 million annually. Amazon would have been on the hook for approximately $11 million per year. Of course Amazon and the other companies protested. Anyone with an ounce of common sense should have as well. Any company being hit with the tax would have to make up the loss of funds somewhere. Guess where that would have been? Yep, you got it right in one try. It would have come from our pockets. It would have come from an increase in costs. In a decrease in benefits. In fewer jobs and slower corporate expansion.

Funny, isn’t it, how the Seattle City Council didn’t foresee these issues?

Funny, too, is how a unanimous council can change its tune so quickly. From each member voting for the head tax in May to seven of nine voting to repeal it, the head tax fell. To say the tax was unpopular is downplaying how many in the area felt. 17,000 signatures were required to qualify for a repeal initiative to be placed on the ballot. More than 46,000 were collected by the time the Council decided to revisit the head tax.

Homelessness is an issue in Seattle. There’s not mistake about that. However, to place a heavy levy on businesses, even if they are only the top 500 employers in town, isn’t the way to deal with it. Yes, those living in Seattle were right to demand to have more of an accounting from the politicians running their city about how they were going to deal with the problem. But the answer isn’t to alienate the business community to such a degree that they slow or stop new construction or, worse, consider leaving the area.

Repeal of the tax isn’t, “a cowardly betrayal of the needs of the working people,” as alleged by Councilwoman Kshama Sawant. Sawant voted against the repeal. Nor was the repeal solely the fault of Amazon, as one might assume based on the way so many articles have framed the narrative. What it is is another indication that the Seattle City Council tends to act with regard to businesses within its jurisdiction without taking into consideration how those businesses might respond. In 2014, it passed rules to “strictly regulate” ride-share companies like Uber. You guessed it, Uber and the others didn’t appreciate the new regulations and raised more than $400,000 to fund a repeal. Before that happened, the Council voted to repeal the ordinance.

Seattle didn’t learn. You hit a business’ bottom dollar and it isn’t going to bend over, like the frat initiatives in Animal House and ask for more.

Instead, they will let you know exactly what they will do. They will slow down construction. They will stop expansion plans. They will hike prices. They will layoff employees. If that doesn’t work, well, ask California what happens when you piss off the businesses in your area enough. They will pack up and move to more welcoming climes.

With Amazon already looking for a location for HQ2, is it any wonder Seattle blinked? That’s not the problem. The real problem is that none of the members of the Council seems to have considered Amazon, or Starbucks, or any of the other companies hit by the tax, might pack up and take its tax dollars elsewhere.

Perhaps, instead of trying to shout down politicians or demand bug business pay for everything, those doing their best to disrupt the vote should get up off their asses and actually try to find a plan those 500 businesses impacted by the head tax, as well as all the other businesses in town and the charities and churches, etc., could get behind to help deal with the homeless issue. Nah, who am I kidding? They’re having too much fun being so invested in making this all about how evil Amazon is and how unfeeling the rest of us are.

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  • Brian Brandt says:

    $0.14 per hour, assuming nobody worked overtime comes to about $290 per employee (0.14 X 2080 hours per year). 45 million divided by 290 works out to 154,000 employees. That sounds like a lot of employees.

  • Wfjag says:

    The Milch Cows kicked back. Is that fair?

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