Homelessness is rampant in Seattle. The ever-increasing rates of people living on the streets, has also brought a rise in activism to lessen it.
On May 14, the Seattle City Council voted to unanimously approve a head tax on companies making over $20 million annually. This means that over 585 companies in our city will pay $275 per full-time employee per year in tax money. The Seattle Times estimated the revenue to be between $47 million to $50 million annually.
In response to the tax, a coalition of businesses began a campaign called “No Tax On Jobs” that will attempt to overturn the tax through a citizen referendum. If the coalition can gather 17,632 signatures by June 15, they will get a referendum on the tax.
The revenue gathered from this tax is intended for low-income housing and other homelessness aid. However, that goal of money allocation is nonbinding and actual spending decisions will be dictated in the fall as part of the city budget. This tax will begin in 2019 and expire in 2023, unless the City Council renews it.
Councilmember Lorena Gonzalez was a vocal advocator for the tax, but not without immense resistance from businesses and exhaustive negotiations with Mayor Durkan.
Durkan threatened to veto the tax when Gonzalez and the three other councilmembers originally proposed it as $500 per employee per year. This threat of veto led to the compromised figure of $275.
Sara Rankin, a law professor at Seattle U and both the founder and director of the Homeless Rights Advocacy Project, supported the original $500 tax.
“No one can dispute that big employers put pressure on housing supply,” Rankin said. “Significant employers bear responsibility for settling the problem they created.”
Tim Harris, editor of Real Change News—a newspaper and advocacy organization dedicated to improving the lives of Seattle’s homeless population—spoke his thoughts on the tax.
“The Mayor’s compromise was wise… she is trying to bring people together,” Harris said. “The new resources, if the tax survives the counterattack, will have a large impact on a lot of lives.”
As the rise of big businesses in the city is correlated with the rise in cost of living, supporters feel the large corporations deserve the “required humanitarianism” achieved through this tax. The American Prospect stated “between 2015 and 2017, the rate of homelessness in [Seattle] grew by 44 percent.”
“I support the Employee Hours Tax legislation… but also recognize that $47.5 million more annually is not enough to make a large difference,” Harris said. “Seattle is tapped out on regressive taxes and needs to deal with the issue that the wealthy aren’t paying their share.”
“I don’t think anyone would argue that this tax, in particular, is a perfect policy,” Ashley Archibald said, a reporter for Real Change News. “There are valid arguments that payroll taxes… are still regressive taxes that impact low income people and companies operating with low margins more than high income people and companies that are raking it in. Unfortunately, we live in a state where there are very few other options. We don’t have an income tax… We don’t have a capital gains tax, which is truly perplexing given that Seattle operates in a tech environment.”
The ineffectiveness of past spending allocated towards homelessness efforts is a large factor in the Seattle business community’s opposition to this tax.
“There is criticism in light of failure to spend well and communicate clearly about how money is being spent. That is a very fair critique,” Rankin said. “But I don’t believe that means we should stop giving money, we should just be more demanding about how city spends it.”
However, Rankin did express extreme frustration toward the money allocation of this tax. She said the results of affordable housing and housing first initiatives have been “studied to death” and proved the most effective solutions, yet that’s not how the majority of this tax money will be allocated.
“It makes me bang my head against a wall,” Rankin said. “Most is being spent on very ineffective methods such as emergency shelters, criminal system first and rental vouchers.”
Opposers to the tax fear that businesses will downsize or simply decide to relocate to less tax-heavy states. Amazon, the employer of 10 percent of the city’s workforce, manifested that threat when they referred to the tax as a “hostile approach to larger businesses that forces us to question our growth here.”
However, advocates of the tax believe this quantity of money is only a mere fraction of what it would actually take to solve the homelessness crisis in our city. The consulting firm McKinsey and Co. published a report which concluded it would take about $400 million per year to remedy Seattle of homelessness. Of that, the report said 85 percent should go towards affordable housing. Cisco recently committed $50 million to homelessness and on May 21, Kaiser pledged $200 million to affordable housing efforts.
“That’s the magnitude of giving required,” Rankin said. “Large companies in Seattle have not shown a willingness to contribute to the degree that I believe they are responsible for. They’ve had a lethargic response to the homelessness crisis.”
Sarah may be reached at
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