No one can say that the City Council of Seattle lacks bravery, even if it does lack for common sense. The City Council essentially declared all-out war on the tech companies that have made Seattle such a Mecca for hip young people seeking cool jobs. On Monday, the council voted unanimously to levy a "head tax" of $275 on every full-time employee at a company with more than $20 million a year in revenue.
The money raised supposedly will help Seattle cope with its homelessness crisis, but in squeezing the tech industry, the progressives on the City Council have forgotten something: If you tax something, you risk getting less of it, and certainly fewer jobs isn't the answer to helping the city's homeless.
The city is already seeing this principle in practice as Seattle-based Amazon, which employs 45,000 full time workers in the city, temporarily halted construction on a new skyscraper and Jeff Bezos, founder and CEO of Amazon, indicated that he might reconsider his company's commitment to Seattle.
"We are disappointed by today’s City Council decision to introduce a tax on jobs,” Amazon said in a statement. “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.”
Given that there is hot competition from other American cities to become home to Amazon's second headquarters, this stated apprehension about the Seattle's business climate, should give Seattle's City Council pause. But no. Instead Council member Kshama Sawant, a member of Socialist Alternative (indeed, she is reportedly the highest profile member of the Trotskyite group), called Amazon's move "extortion."
Sawant would be wiser to regard Amazon's response not as extortion but as a harbinger of things to come, if the anti-business climate persists.
Ms. Sawant doesn't like Amazon very much anyway: she has led ralliesagainst Amazon at the company's headquarters, with protesters carrying Sawant's trademark "Tax Amazon" signs. Does she not realize that the giant, job-providing company could pack up and leave Seattle?
Heather Redman, a Seattle venture capitalist, took Amazon's response to the tax more seriously than Sawant. "I think [Amazon] will definitely stop or slow its growth in Seattle if the tax passes," she told Geekwire. "I think there’s no question about that. …They’re not a saber-rattling, big-talking company and never have been. They tend to say what they’re going to do and then do it. So I do not think this [temporarily halting construction] is a maneuver."
Amazon, by the way, is a company that has been sympathetic to Seattle's homelessness emergency. Amazon built a permanent homeless shelter called Mary's Place within its main headquarters. It was designed to give shelter to around 200 women, children and families each night. "Mary's Place is helping me find a job and makes sure my son gets to the preschool he adores," one recipient of services there says on the website, "I don't know what I would do without them."
Encouraging endeavors such as Mary's Place might be a better, non-coercive way to enlist companies to help with the city's homelessness. Indeed, if you read the statement put out by Starbucks — perhaps Settle's most iconic company, which would also be affected by the head tax — you just might conclude that Amazon has been better than the City Council with creative solutions to homelessness.
"This City continues to spend without reforming and fail without accountability, while ignoring the plight of hundreds of children sleeping outside. If they cannot provide a warm meal and safe bed to a five year-old child, no one believes they will be able to make housing affordable or address opiate addiction. This City pays more attention to the desires of the owners of illegally parked RVs than families seeking emergency shelter."
Council members should consider other ways to address homelessness. The Council could start by reconsidering its strict zoning regulations that contribute to the rise in housing costs. It should reexamine existing programs meant to help the homeless and make sure they are working. They could see what else in the city's budget could be reallocated to address this crisis.
Sadly, the City Council seems to prefer squeezing companies for more money, in effect dumping the problem in their laps without any guarantee that the money would be spent wisely. That approach makes sense only if the businesses that have made Seattle a thriving city are nailed to the ground. They aren't.