Seattle City Council Passes $45 Million Head Tax Compromise

King County Executive Dow Constantine delivers the 2017 State of the County address in Auburn

Seattle's city council on Monday voted to impose a new "head tax" on the city's biggest companies, including Amazon.com, as a way of fighting a housing crisis sponsors attribute largely to a local economic boom driving up real estate costs.

The council approved the tax which is expected to raise about $48 million (€40 million) annually to pay for affordable housing and services for homeless people.

After the council began considering the tax earlier this month, Amazon took the unusual step of halting construction plans on its expansion, putting the brakes on a development site in the northern end of the city's downtown and vowing that it would forgo additional leased space if the council moved forward.

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While several other companies in the city like Starbucks disapprove of the change, Amazon's reaction to it is by far the strongest with the company looking for its 2nd headquarters in another city. Under the current proposal, the city will charge large companies 26 cents for every hour their employees work.

"There is no way this tax will be a burden on big businesses in Seattle", Sawant told The Seattle Times.

Friday, a council committee approved a veto-vulnerable $500/employee version of the tax.

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"I think we have to convince the public that we're using [funds] wisely and strategically, and I think we've failed in that regard as a city", said Council President Bruce Harrell during Monday's meeting.

The opposite scenario-that one of the five members who voted for the original $500 tax will join the four-member minority that wants to cut it in half-seems highly unlikely, since all five council members have consistently supported the proposal that came out of the task force, and since they stand to gain more, politically speaking, by forcing Durkan into a veto fight than by switching sides and handing the mayor a bloodless victory.

The city spent 68 million dollars on homelessness a year ago, and some said they wanted to see the city prioritise its money better.

The city's top private employer has become emblematic of Seattle's growing pains and the explicit target of Seattle City Councilmember Kshama Sawant and her supporters. The Seattle region had the third-highest number of homeless people in the USA and saw 169 homeless deaths in 2017. "At the same time, our city must urgently address our homelessness and affordability crisis", she added in a recent emailed statement. Two areas considered favorites by analysts for the second Amazon headquarters, Boston and Washington, D.C., have experienced their own surges. A final vote on the head tax is scheduled for 2 p.m. Monday in council chambers. One of them told committee members that if the tax passes, workers will have to go home, look their kids in the eye and tell them Daddy doesn't have a job anymore. The new plan would raise an estimated $50 million a year instead of the original $75 million. A primary concern is the effect on job growth.

The spending plan for the new proposal allots about 62 percent of revenue to go towards construction of affordable housing inventory and services.

Scruggs reported from Seattle.

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