The Seattle City Council explored a tax on large businesses that would bring in $500 million to address the housing crisis and homelessness and deliver cash payments to households hit by the coronavirus at their budget meeting April 29.
Under the legislation, the city would levy a 1.3 percent tax on businesses with payroll of more than $7 million. Employers would be prohibited from passing those costs onto their workers, and certain low-margin businesses such as grocery stores would be exempt.
The proposed tax — dubbed the “Amazon tax” in some circles — is an evolution of a previous measure pushed by Councilmembers Kshama Sawant and Tammy Morales. It would raise roughly $200 million more than its first iteration, and the promise of additional funds would be used to put cash into the pockets of low-income households in the city. Revenue from the tax wouldn’t flow to the city until 2022, so money for the cash payments would come from a series of loans from six other city funds.
The other $300 million would go toward affordable housing and environmental improvements on existing buildings.
Low-income Seattleites were hurting before the coronavirus crisis, Sawant said. The public health emergency is only exacerbating their economic pain, which could be somewhat ameliorated by the tax plan.
“It is truly an emergency,” Sawant said. “Whether anyone agrees with me on the Amazon tax, I think they will agree that we are in an emergency and ordinary people are in an emergency, and the point is to provide cash assistance.”
The mechanics of passing the tax are complex, and supporters anticipate a major roadblock from the Mayor’s Office.
The tax is actually a package of three bills, each of which are dependent on the success of the others.
First is the tax legislation itself, which would bring in $500 million, but not before 2022. The second is an interfund loan, which would make $200 million available immediately to help households in need. The interfund loan is actually six interfund loans of $50 million each that would come from the Low-Income Housing Fund, Housing Incentive Fund, Families Education and Preschool Promise Levy Fund, Move Seattle Fund, Seattle Parks District Fund and the 2019 Library Levy Fund.
Finally, the council would need to pass a plan to spend the money.
“The spending bill relies on interfund loan, and the interfund loan relies on tax bill,” said Dan Eder, deputy director of Council Central Staff.
Whether any of the bills are enacted or enacted quickly will require near unanimous support from the City Council, and Mayor Jenny Durkan’s signature. Statements from the mayor about the tax are not promising.
When asked about the payroll tax at a virtual press conference regarding a potential $300 million reduction in city revenues, Durkan dismissed that it could be a solution to the city’s financial problems.
“There are no ways, mechanisms or tricks to somehow magically have money appear this year or next year to fix these budget shortfalls,” Durkan said.
In an April 23 interview on KUOW, the mayor cast doubt on whether the efforts to use interfund loans to get money into the hands of Seattle households was even legal.
“It doesn’t work that way because one, a number of the funds that people have identified — it’s unclear whether you can even borrow from them legally,” Durkan told KUOW host Bill Radke. “But more importantly, when you borrow money, you gotta pay it back.”
That doesn’t sit well with Tye Reed, an organizer with the Transit Riders Union and a case manager.
Reed and other members of the Transit Riders Union gathered on the steps of City Hall before the budget meeting earlier in the week, holding signs and at least 6 feet apart, to encourage the City Council to move forward with the tax plan.
“She’s someone bought out by big business,” Reed said of the mayor. “She can’t call herself a progressive liberal.”
People need financial support now and the affordable housing that would be financed under the spending plan, she said.
“I’m going to go to work and tell 50 people I can’t help them, and they’ll need to find a way to make May rent,” Reed said. The impotence in the face of such need has caused her to feel depressed and enraged.
New councilmembers relied on the Transit Riders Union to knock on doors and get out the vote when they ran for office in November 2019. It’s time for them to step up, Reed said.
“No longer can people take us or our votes for granted,” Reed said.
Ashley Archibald is a Staff Reporter covering local government, policy and equity. Have a story idea? She can be can reached at ashleya (at) realchangenews (dot) org. Follow Ashley on Twitter @AshleyA_RC.
Read more of the May 6-12, 2020 issue.