Seattle Head-Tax Unlikely to Return Soon

Seattle - Jerry Meaden - CC BY 2.0

With the coronavirus wreaking havoc on the nation’s economy, Seattle City Council has decided to play nice with big employers. The original Seattle “head” tax was designed to tax businesses in King County with gross annual revenues of over $20 million. The “head” tax counts each worker employed by a firm, taxing them at $275 per employee. The initial taxation rate was $500 per employee but was leveraged against by corporations like Amazon and Starbucks. The expected revenue of the tax was estimated to be around $50 million. On May 14, 2018, the tax was passed unanimously by the nine councilmembers. A month later, the decision was reversed by a 7-2 vote. Being one of its foremost exponents, senior-most member Kshama Shawat of the Socialist Alternative movement had voted in favor of the tax both times.

Shawat has championed and emphasized the need for a head tax. Not only would this tax implement a new source of revenue for Seattle homeless services, but it would also reallocate profits away from top-feeding corporations. In January of this year, Shawat introduced a new head tax, which would generate four to ten times the expected $47 million created by the prior tax. She appealed to the necessity for large taxation on big businesses in Seattle, saying, “It is our responsibility to strike while the iron is hot and immediately begin building a powerful grassroots movement to tax Amazon and other big businesses in our city.” On April 25, Forbes reported that in the past month alone, billionaire wealth had grown astronomically: Jeff Bezos of Amazon up $27.5 billion, MacKenzie Bezos up $9.7 billion, Mark Zuckerberg of Facebook up $13.4 billion, Steve Ballmer of Microsoft up $10.5 billion, Warren Buffett of Berkshire Hathaway up $10.1 billion, Elon Musk of Tesla up $9.6 billion and Larry Page of Google up $8.7 billion. While the “essential” economy continues to work, the rest of us await news of a vaccine.

The net worths of the billionaires, as mentioned above, combine to some $500 billion. The projected revenue of the new head tax is estimated to be between $200 and $500 million. While Microsoft, Starbucks, Amazon are the most prevalent employers in the area by name, the obscenity of wealth amassing atop our economic pyramid is puzzling given the cruel realities of poverty in Seattle. When will push come to shove?

This week I was given a chance to interview Bellevue College’s economics teacher Tyler Saxon. He spoke at length about the prospects of a head tax. “I think it will happen at some point, sooner or later, but probably a bit later because of the crisis. In terms of the impact on the economy, I think it would definitely be a net positive.” He concluded, “I think it will happen at some point because the rising inequality is building pressure towards something like this. The top is rising so far above the bottom that society will crumble at some point…”, he went on to posit, “I remain an optimist.”

In May of 2018, the management consulting firm McKinsey & Company published a report which concluded that the city of Seattle would have to double its current spending to alleviate the economic hardships of our downtrodden citizens. The crux of their argument is that affordable housing would be less costly for the city than our rampant homelessness issue. The countervailing narrative is that due to an increase in taxation, businesses would be forced to relocate or restructure their operations. In my eyes, this is the sign of a healthy economy. The moniker too big to fail comes to mind when we start granting extraordinary influence on policy to big business. The legislators must do what best serves the interest of their constituency, and the capitalists must tend to the interests of their shareholders. All King County residents agree that homelessness is an issue, but so is unemployment. Despite the pandemic, and while the tax faced major backlashes from business owners in 2018, there is still a moral imperative to shelter the homeless, feed the hungry and clothe the cold, now more than ever.

Shawat is advocating for legal opposition to the repeal, arguing for a more democratic method such as a referendum. The prognosis for the newest incarnation of the head tax is not hopeful in the near future. Still, it is only a matter of time before inequality poses a greater dilemma to our communities.