Seattle’s city council has approved a new tax for the city’s biggest companies, including Amazon, to combat a housing crisis impacting the city’s working class.
According to Reuters, the crisis is caused partly by the local economic boom that has increased real estate costs.
The new tax was passed with a 9-0 vote, and would affect most companies grossing at least $20 million a year. At 14 cents per employee per hour worked within the city, the new tax would cost companies about $275 annually for each worker.
This “head tax” formula will generate $45 to $49 million per year over five years to build more affordable housing and to provide support services for the homeless. The tax would end after five years unless the city chooses to renew it.
Amazon has led opposition to the plan, even saying earlier this month that it was pausing its plans for a new major downtown office building, also known as the Block 18 project. As the eCommerce giant is the city’s largest employer, the move put more than 7,000 jobs in jeopardy. However, the company said after the vote that it would resume construction on the project.
But Amazon’s vice president, Drew Herdener, added, “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.”
The company said it is still evaluating whether to sub-lease space in a second future office tower in Seattle, a project called Rainier Square. If this happens, it would move certain jobs to another location and help Amazon avoid raising its tax liability even further.
In addition to Amazon, the tax would also affect Seattle-based coffee retailer Starbucks and department store chain Nordstrom. California-based companies, such as Apple, Google and Facebook, have a large enough presence in Seattle to be subjected to the new levy.
The tax is expected to affect about 500 companies – 3 percent of the city’s private sector – while healthcare companies and non-profits are exempt.