Seattle's 'Amazon tax'

The smartest insight and analysis, from all perspectives, rounded up from around the web:

"What responsibility do companies have toward the communities in which they function?" asked Aseem Prakash and Nives Dolsak at The Hill. To the Seattle City Council, the answer is quite a lot. Last week, the nine-person panel unanimously approved a new $275-per-employee tax on big companies in the city, in order to raise about $48 million annually for homeless services. Seattle is in the midst of a homelessness crisis: Between 2015 and 2017, the number of people sleeping on the street grew by 44 percent, and some 400 homeless encampments now dot the city. But Seattle's biggest companies, including Starbucks, Expedia, and Alaska Airlines have loudly complained that a tax on them is the wrong approach; Amazon — the city's largest employer — even briefly froze construction on a new, 17-story tower in protest. The threat was clear: "You tax, we leave." Residents are divided over what's become known as the "Amazon tax," said Nick Wingfield at The New York Times. On the one hand, the e-commerce giant has brought tens of thousands of highly paid jobs to the city. But home prices are rising faster than anywhere else in the country — the median home price is now $777,000 — forcing many longtime residents out of the area or "onto the streets."

This job-killing tax is not the solution to Seattle's woes, said The Seattle Times in an editorial. The roughly 600 companies affected provide 150,000 jobs and are "responsible for much of the city's economic activity." They shouldn't be penalized for the city's "bumbling response to the homeless crisis." Last year, nearly $200 million was spent on the county's roughly 12,000 homeless people. Where did all that money go? Residents deserve to "see progress, not just massive spending increases every year." Seattle's City Council has "laudable aims," said Travis Brown at Fortune, but "it's hard to imagine a more destructive strategy for realizing them." Why would any company choose to expand operations in the city now? Plenty of American cities urgently need to tackle inequality and affordability issues. "But economic self-immolation is not the way to do it."

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

What exactly are cities meant to do then? asked Jared Bernstein at The Washington Post. In Seattle's case, Washington state law prohibits local governments from imposing income taxes and caps real-estate tax increases, so city leaders have to get creative. It's also rich for Amazon, which is demanding huge tax concessions from cities vying for its second headquarters, to protest paying a roughly $10 million–per-year tab. The company's first-quarter income was $1.6 billion. "With a 'b.'" The truth is, when companies put down roots and grow, they create "greater demand for public services," such as schools, police, and infrastructure. "So, yes, I think there's a solid rationale for asking them to offset some of the social costs to which they contribute." This bitter brawl "foreshadows battles to come in other cities," said Elizabeth Weise at USA Today. From San Francisco to Washington, D.C., "public anger has risen over who should pay for the civic woes" that often attend economic growth. In Seattle, the lesson appears to be that leaders can push companies only so far before businesses "push back — hard."