Seattle City Council set to vote on controversial head tax for large employers

The Seattle City Council is scheduled to vote Monday afternoon on a proposal to tax the city’s largest employers to help address homelessness.

If council members were to vote the same way they did in a committee meeting Friday and pass the tax with a narrow majority, Mayor Jenny Durkan would need to decide whether to sign it into law, let it become law or veto it.

The council ordinance would in 2019 and 2020 impose a so-called head tax of 26 cents per employee, per hour (about $500 per employee, per year) on for-profit companies that gross at least $20 million in Seattle.

Starting in 2021, the city would instead impose a 0.7 percent payroll tax on the same companies.

Five council votes are needed to pass a law and six are needed to override a mayoral veto. The council members could make changes to the proposal Monday in search of a stronger majority.

M. Lorena González, Lisa Herbold, Teresa Mosqueda and Mike O’Brien are council members sponsoring the ordinance. They and Councilmember Kshama Sawant chose their own proposal Friday over a smaller alternative supported by the mayor, Council President Bruce Harrell and Councilmembers Sally Bagshaw, Debora Juarez and Rob Johnson.

The alternative would have imposed a tax of $250 per employee, per year and been subject to renewal after five years. Durkan said it would have raised $40 million per year.

Decisions on how to spend revenue are made when the mayor and council set the city budget each November. But along with the tax Monday, council members could adopt a nonbinding resolution declaring how they intend for the new money to be spent.

The resolution written by González, Herbold, Mosqueda and O’Brien calls for $50 million per year to be spent on very low-income housing, $20 million per year on homeless shelters and other emergency services and $5 million per year on administration.

The sponsors say their tax could help the city create more than 1,700 units of affordable housing in five years.

A less-detailed plan released Friday by Durkan called for more money from her smaller tax to be spent on shelters and dealing with street encampments than on housing. The mayor said her tax would create only 250 units of affordable housing over five years.

The council members pushing the larger tax are eyeing a crisis.

There were more than 11,600 homeless people in King County tallied in a count last year; nearly 23,000 very poor households are paying more than half their income on rent; about one in 16 Seattle Public Schools students are homeless; and a record 169 people died on the county’s streets last year.

Dramatic increases in Seattle home prices, rents and homelessness in recent years have coincided with economic and population booms.

Homeowners have been hit with property-tax hikes and Seattle’s attempt to adopt an income tax on the wealthy has been struck down in state court, so the council has turned to the city’s largest employers.

They say Amazon and similar companies can afford to pay the tax and should pay it because they have contributed to local housing problems by hiring tens of thousands of well-paid employees.

The big businesses have vehemently opposed the proposed tax, claiming a “tax on jobs” would hurt the economy.

Their allies include voters who contend City Hall should achieve more with the money Seattle already spends to help homeless people.

The debate ramped up earlier this month when Amazon issued a public threat over the tax. The company said it was pausing construction planning on an office tower and was considering subleasing rather than occupying a new skyscraper.

That caused construction-worker unions to oppose the tax, splitting with the rest of the labor movement, which has endorsed the proposal. Many other large employers, such as Starbucks, followed Amazon’s lead.

Durkan had support from various labor unions in her campaign for mayor last year, and Amazon contributed $350,000 to a business group that backed her.

Gauging public opinion has been difficult because there has been no independent polling on the issue.

A poll commissioned by service-worker unions and conducted in early April, before the debate really heated up, found majority support for a head tax among voters.

The phone poll of 400 likely November 2019 voters, obtained by The Seattle Times over the weekend, asked about a tax of $370 per employee, per year on companies grossing over $10 million.

About 56 percent of respondents favored the idea and about 28 percent opposed it. The rest were not sure.