Seattle passes scaled-back tax on Amazon, big companies

King County Executive Dow Constantine delivers the 2017 State of the County address in Auburn

King County Executive Dow Constantine delivers the 2017 State of the County address in Auburn

Almost 600 employers with gross revenues of more than $20 million - including Starbucks and Amazon - will be expected to pay the charge in Seattle from next year onwards.

The tax, on companies with more than $20 million in receipts, will amount to about $275 per employee and is intended for use in improving conditions for the city's homeless.

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 has been in a civil state of emergency over homelessness since late 2015.

Mayor Jenny Durkan heeded the not-so-subtle warnings from retail giant Amazon, who threatened to halt construction of it's new 17-story corporate headquarters downtown.

The tax is expected to be borne by about 500 companies, accounting for 3 percent of the city's private sector.

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

"This progressive revenue stream balances the needs of our small business community, while ensuring we have the funding we need to provide critical housing and health services", said Councilmember Teresa Mosqueda in a statement accompanying the vote.

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"The company recently reported record-breaking profits of almost $2 billion dollars in one quarter", according to a statement by Lorena González, Lisa Herbold, Teresa Mosqueda and Mike O'Brien, the councilmembers who proposed the tax.

"By threatening Seattle over this tax, Amazon is sending a message to all of our cities: we play by our own rules", the letter said. "The city does not have a revenue problem - it has a spending efficiency problem".

The move by Amazon to create HQ2 - a second headquarters elsewhere - has stoked fears that Seattle's liberal politics will turn off the company. The number of homeless students in the city's public schools has tripled, to almost 4,300 last school year.

The $500 tax would have cost the company $20 million a year over the next two years, according to The Seattle Times.

Some construction workers opposed the tax out of concern for their jobs while supporters pressed the council to do something about the rapidly expanding number of homeless families in the city.

The Seattle metropolitan area also is home to the third-largest concentrations of homeless people, nearly 12,000 counted in a January U.S. government survey, and almost half of them were living on the streets or otherwise unsheltered.

"They're driving this economic engine", he said. The money will reportedly be used to combat Seattle's raging homeless problem, but critics are asking what's happened to the millions already spent on such programs over the last few years.

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