Amazon vs. Seattle: City weighs tax on its largest businesses

The Seattle City Council is expected to vote on a new progressive business tax on Monday, which has set the city up for a square-off with e-commerce giant Amazon.

The “Progressive Tax on Business” is a $0.26 tax per hour, per employee. It would target the city’s 500 largest companies, and could reportedly cost Amazon, which has more than 40,000 employees in the area, an extra $20 million per year.

Small and medium-sized businesses, as well as nonprofits, would be exempt from the Seattle tax, which would only apply to businesses earning $20 million or more annually.

Amazon is Seattle’s largest private employer. The company reportedly paid $250 million in state and local taxes in 2017, according to The Seattle Times.

In response to the proposal, Amazon stopped construction on a new 17-story tower at its Seattle campus.

“I can confirm that pending the outcome of the head tax vote by City Council, Amazon has paused all construction planning on our Block 18 project in downtown Seattle and is evaluating options to sub-lease all space in our recently leased Rainier Square building.” – Drew Herdener, Amazon's vice president, said in a statement.

The project is expected to create an additional 7,000 jobs for the ecommerce giant.

According to local media reports, at a meeting last week construction workers showed up to say they would be out of work if the council passed the tax.

The city wants to use the tax, which is expected to generate about $75 million in revenue, to address homelessness and housing affordability for residents. Twenty-nine thousand households earning less than 50% of the local median income are spending more than 50% of the income on rent and utilities, according to the city council.

Some believe the influx of high-paid tech workers to companies like Amazon in the area have exacerbated those problems.

According to the tech giant’s website, 15% of its employees live in the “same zip code as their office.”

The skirmish comes as Amazon narrows the list of options for its second U.S. headquarters, known as HQ2.