With threat of a proposed ‘head tax,’ Amazon halts further construction in Seattle

With threat of a proposed ‘head tax,’ Amazon halts further construction in Seattle
Amazon has halted a huge project in downtown Seattle pending a vote by the city council on a new tax targeted at the city's largest employers. (David Ryder/Getty Images)

Seattle’s city council is considering a new “head tax” to be imposed on businesses with annual taxable receipts of more than $200 million. The move would cost Amazon over $20 million at the rate of 26 cents per employee per hour as proposed, causing the company to halt construction of a huge project in downtown Seattle upon news of an upcoming vote on the measure.

Amazon’s vice president, Drew Herdener, said, “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 evaluation options to sub-lease all space in our recently leased Rainier Square building.”

More than 45,000 people in Seattle are employed by Amazon.

The city hopes to raise $75 million annually with the new tax in order to provide affordable housing and additional services for the homeless. Roughly 585 businesses would face a targeted tax under the new proposal.

City councilmember Kshama Sawant said at a council meeting on Wednesday in response to Amazon’s move that it was critical that “we not accept this extortion.” Sawant referred to the tax as “pocket change for these businesses” and added that “Amazon is perfectly capable of paying that, double, even four times that.”

Another councilmember in support of the proposal, Mike O’Brien, said, “I understand Amazon doesn’t like it. I’m sure they would love to go to a city that has no taxes. And maybe they will find that place.”

Following the news of Amazon’s halted downtown project, the president of the Downtown Seattle Association, Jon Scholes, said, “Amazon’s growth in the heart of the city has had a significant economic benefit for small, medium and large businesses in Seattle across a number of sectors. A pause in that growth will be felt by many – from construction workers to hotels to small businesses. This news should serve as a wake-up call to those proposing a risky plan to tax jobs in Seattle.”

A history professor from the University of Washington also chimed in on the situation. Margaret O’Mara’s shared her perspective that “This is a hometown employer that Seattle is ambivalent about. Amazon has catalyzed so much of the growth, but it has exacerbated the problems that were pre-existing conditions.”

Amazon is currently determining where to house their “HQ2” second headquarters in a yet-to-be-announced city, which is expected to provide 50,000 new jobs.

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