UPDATE: This story was originally written when the council vote was pending. It has been revised to reflect the outcome of and reaction to yesterday’s council vote to repeal the tax.
Less than one month after approving it, the Seattle City Council abruptly reversed course Tuesday and voted 7-2 to repeal what’s become known as the “head tax,” a tax on large employers meant to raise $47 million per year to address the city’s homelessness crisis.
The Seattle Times reports that Mayor Jenny Durkan intends to sign the bill into law, repealing the tax, which was set at $275 per employee per year for companies that gross $20 million per year.
“It is clear that the ordinance will lead to a prolonged, expensive political fight over the next five months that will do nothing to tackle our urgent housing and homelessness crisis,” Mayor Durkan and the seven council members said in a statement posted on the mayor’s website. “The City remains committed to building solutions that bring businesses, labor, philanthropy, neighborhoods and communities to the table. Now more than ever, we all must roll up our sleeves and tackle this crisis together. These shared solutions must include a continued focus on moving our most vulnerable from the streets, providing needed services and on building more housing as quickly as possible. The state and region must be full partners and contribute to the solutions, including working for progressive revenue sources. Seattle taxpayers cannot continue to shoulder the majority of costs, and impacts.”
A campaign funded by businesses called No Tax on Jobs raised more than $200,000 and planned to submit signatures for a repeal referendum on the November ballot, the Times said. Amazon, Starbucks and Vulcan, a company founded by Microsoft co-founder Paul Allen, supported the repeal campaign, the Associated Press said.
Lisa Daugaard, a member of a city task force whose recommendations helped create the head tax proposal, decried the businesses that fought against the tax.
“The onus is very much on those who fought so hard against this solution to identify a better one, or admit they’re OK with the city having shanty towns and favelas in our public spaces indefinitely,” she told the Times.
As Next City has previously reported, Seattle declared a homelessness state of emergency in 2015. The county has the country’s third-largest homeless population, a number that jumped 4 percent in the annual one-night recount held in May, according to the Times. Part of the cause is soaring rents, which have risen 57 percent in the past six years, and high home prices (the median home price is around $720,000). Further, Washington State, which has no income tax, has the most regressive tax system in the country. Seattle is the only city in the U.S. to have one of the top five highest tax burdens for people earning $25,000 or less, while also having one of the lowest tax burdens for people earning more than $150,000.
Denise Moriguchi, chief executive of longtime Seattle grocery company Uwajimaya, told the Seattle Times that she believed the head tax was an “ill-conceived proposal to tax the very businesses which provide jobs, generate tax revenue and provide support to organizations that help address homelessness.”
While the head tax — a scaled-down compromise of the original proposal — passed the council unanimously in May, only two council members, Kshama Sawant and Teresa Mosqueda, voted against the repeal on Tuesday. The Times quotes Sawant saying the vote was a “cowardly betrayal” that bows down to big business. Mosqueda slammed what she termed Amazon’s “empty handshake” in initially negotiating the reduced head tax amount, only to make a substantial donation to the referendum campaign after the first vote was passed.
Council member Mike O’Brien, who originally supported the tax, told the Seattle Times that he “didn’t fully contemplate” what a contentious referendum process would look like. “The likelihood of a good outcome seems slim enough that I want to pivot.”
“We’re at this standoff,” he said. “Everyone can kill everyone’s ideas and then we end up 2½ years into a state of emergency and we really haven’t done much.”
Rachel Kaufman is Next City's senior editor, responsible for our daily journalism. She was a longtime Next City freelance writer and editor before coming on staff full-time. She has covered transportation, sustainability, science and tech. Her writing has appeared in Inc., National Geographic News, Scientific American and other outlets.