Seattle approves ‘head tax’ on large businesses despite Amazon’s opposition

The Seattle City Council on Monday approved a pared-down version of the “head tax” on the metro area’s largest employers to fund efforts to battle homelessness despite public criticism from local businesses, including e-commerce giant Amazon.

Approved by a vote of 8-1 on the amended version, the measure will go into effect in January 2019 and tax companies that earn $20 million or more in annual sales 14 cents per employee hour, or $275 per employee annually. The tax is expected to raise roughly $50 million per year toward outreach efforts for the homeless, including affordable housing and emergency shelter.

Proponents on the city council reluctantly agreed to reduce the scope of the bills, which originally called for a tax of 26 cents per employee hour to raise about $75 million annually. Seattle Mayor Jenny Durkan had vowed to veto the larger tax.

While supporters said the head tax was necessary to fund efforts to address a housing crisis and rising homelessness in the city, the measure was met with near-universal opposition from businesses, as well as the Seattle Metropolitan Chamber of Commerce.

In the days ahead of the vote, Amazon said it had halted planning on a new 17-story office tower pending the city council’s decision. The Seattle-based e-commerce company employs more than 40,000 workers in Seattle, with plans for further expansion.

Amazon vice president and spokesman Drew Herdener said the company is "disappointed" with the Seattle City Council's decision to impose the tax.

“While we have resumed construction planning for Block 18, 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,” Herdener said. “City of Seattle revenues have grown dramatically from $2.8B in 2010 to $4.2B in 2017, and they will be even higher in 2018.”

Herdener added that city revenue "far outpaces" Seattle's population growth over the same period.

"The city does not have a revenue problem – it has a spending efficiency problem. We are highly uncertain whether the city council’s anti-business positions or its spending inefficiency will change for the better," he said.

Seattle-based coffeehouse chain Starbucks did not immediately respond to FOX Business’s request for comment on the city council’s decision.

Boeing, Costco Wholesalers and Microsoft, which are each among Seattle’s largest employers, declined to comment on the matter.

This story has been updated.