The Seattle city council has just passed (9-0) a “head tax” on all large businesses that have more than $20 million in revenue.
The tax amounts to $275 per year for each employee at these businesses, and is expected to raise nearly $50 million per year for the city. The money is to be used to help alleviate various problems associated with the increased homelessness in the city. The homelessness increase is said to be occurring due to the rising cost of living in the area, especially that of rising housing costs, which is increasing at the highest rate in the country.
Recall that Seattle has recently enacted legislation to increase their minimum wage to $15.00 per hour. This law was passed in 2015 with a gradual rate increase to $15.00 which took effect on January 1, 2018.
In a report in the Washington Post about the issue, one homeless Seattle man lamented
“When you work minimum wage at $15 an hour, you end up spending 90 percent or more of it on rent and the rest of it in bills,” said Alexander Finch, 27, who identified himself as homeless and living in one of the city’s tent communities. “So you’re either well-off and hungry or homeless and well fed.”
The plan for the head tax has made national headlines due to the fact that Amazon is in the process of building a new office tower in Seattle and paused that project pending the outcome of this vote. Amazon employs approximately 45,000 people in Seattle, so they are looking at paying approximately $12.4 million per year for the head tax.
According to FOXBusiness, Drew Herdener, Amazon’s vice president and spokesman, expressed that the company is “disappointed” and
“While we have resumed construction planning for Block 18, we remain very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here,” Herdener said. “City of Seattle revenues have grown dramatically from $2.8B in 2010 to $4.2B in 2017, and they will be even higher in 2018.”
The original plan for the head tax was going to be $500 per year per employee, but Seattle Mayor Jenny Durkan objected to that amount due to the possibility of it hurting job prospects in the city. The Council then compromised to the $275 per employee amount which the mayor is prepared to sign.
Commenting to CNNMoney
“This legislation will help us address our homelessness crisis without jeopardizing critical jobs,” Durkan said in a statement.
She promised “urgent action to move people off our streets and into safer places and to clean up garbage, needles and waste from our parks and communities” while also creating “more accountability and transparency with taxpayer dollars.”
Why this matters:
If we were operating under the original intent of our Constitutional Republic, using real federalism, I would not have a problem with what Seattle is doing. Each State, and each locality should be an experiment in what works and what doesn’t. So if they want to raise their minimum wage to what they erroneously believe is a “living wage”, and tax their businesses for every employee that they have, they should be welcome to it. The problem is that we are not operating under that federalism. Under the proper federalism, they would need to suffer the full consequences of their unwise actions. They would reap what they sow. However, the way things are now, their mistakes are bailed out by the rest of us around the nation. When that homeless man cannot afford to eat, or loses his job because of the wrongheaded actions of the city, we will all pay for the benefits for that man because of it. When cities like Seattle can experiment with their cockamamie ideas without suffering the full consequences while being subsidized by the rest of us, they will continue to act irresponsibly.
Feature Image By Bryce Edwards