Seattle Repeals Tax on Large Employers

Revenue would have funded housing and other services for the city’s homeless

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Seattle Repeals Tax on Large Employers

The Seattle City Council has repealed a tax on large employers after receiving considerable backlash from Amazon, which is headquartered in the city, and other businesses. The tax revenue would have funded housing and provided other services for the city's growing homeless population.

We've rounded up the latest news on the tax. Here are SHRM Online resources and news articles from other trusted media outlets.

Signatures Secured for Vote

The employee head tax of about $275 for each full-time employee would have generated around $47 million annually from about 585 large businesses in the city (that gross at least $20 million a year). Although the Seattle City Council unanimously approved the tax, it became clear that efforts to repeal the law would likely succeed. The No Tax on Jobs campaign, which is backed by Amazon, Starbucks and the Northwest Grocery Association, secured more than double the required signatures to get the issue on the ballot for voters to decide in November.

(CNN Money)

Heated Debate

Supporters of the tax argued that Seattle's wealthiest companies have benefited from the city's growth and should help pay for needed services. Four council members said in a statement that the cost of providing services in the rapidly growing city has vastly outpaced the city's revenue. "We must make urgent progress on our affordability and homelessness crisis," said Mayor Jenny Durkan, who signed the tax ordinance into law in May. However, opponents said the tax would drive business out of Seattle. Amazon Vice President Drew Herdener said the tech giant was "apprehensive about the future created by the council's hostile approach and rhetoric toward larger businesses."

(SHRM Online)

[SHRM members-only online discussion platform: SHRM Connect]

Bigger Tax Was Initially Proposed

The Seattle City Council was initially considering a $500 per-worker tax, but passed a compromise plan at $275 per employee when the bill's sponsors conceded they couldn't get the six votes needed to approve the larger amount. But the council members who sponsored the higher tax said the lower rate wouldn't adequately address the city's housing needs. In opposition to the tax, Amazon's Herdener said the city "does not have a revenue problem—it has a spending efficiency problem." Although the council repealed the tax, it doesn't yet have a replacement plan to address the city's homelessness issues.

(Chicago Tribune)

Is Silicon Valley Next?

Mountain View, Calif., where Google is headquartered, and Cupertino, Calif., where Apple is headquartered, are each considering a per-employee tax on businesses. If the respective city councils approve the measures, residents will have an opportunity to vote on them. But it's not yet clear if Seattle's tax repeal will have any effect on the other cities' proposals. The tax revenue would be used to improve transportation and provide more affordable housing.

(CNN Money)

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