Do you hear that? Like the running of the bulls in Spain, the sound is the mass exodus of big companies fleeing Seattle after the city council voted overwhelmingly to install an employee head tax on large businesses. The only person who can put out the spark that ignited the war on jobs is Mayor Jenny Durkan, and she has threatened to veto the legislation.
On Monday night, Seattle lawmakers voted 9-0 to install a new $275 head tax, down from the originally suggested $500, on for-profit private firms that gross $20 million per year. It is projected that the municipality could raise $47 million annually over the next five years.
Councilmember Teresa Mosqueda said members of her community are dying on the streets because of the paucity of shelters. She argued that the tax “will have a meaningful impact on addressing our homelessness crisis by building housing and providing health services.”
Kshama Sawant, the biggest business-hating crusader for the legislation, averred that the smaller tax “is [a] huge victory and pushback on corporate bullying.” The silver lining for opponents is that Sawant has come under fire for using public resources to endeavor in her anti-business animus.
So, what now?
Business Community Responds to Approval
Amazon has restarted construction on a 17-story commercial building, but the company is unhappy by the news. Spokesman Drew Herdener said in a statement:
“We are disappointed by today’s City Council decision to introduce a tax on jobs. While we have resumed construction planning for Block 18, we remain very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here.”
The online retail juggernaut also lamented on Seattle’s accounting practices. Amazon explained that the city has seen its revenues surge from $2.8 billion in 2010 to $4.2 billion in 2017, which outpaces the overall population increase in the same period.
“The city does not have a revenue problem–it has a spending efficiency problem. We are highly uncertain whether the city council’s anti-business positions or its spending inefficiency will change for the better,” Herdener added.
John Kelly, Starbucks senior vice president of global public affairs and social impact, slammed the city for not making any spending reforms and not facing accountability for their failures. He said in a statement:
“If they cannot provide a warm meal and safe bed to a five-year-old child, no one believes they will be able to make housing affordable or address opiate addiction. This City pays more attention to the desires of the owners of illegally parked RVs than families seeking emergency shelter.”
It isn’t just Amazon upset by the new jobs tax. Many businesses will take a big hit moving forward.
Saul Spady, whose grandfather launched Dick’s Drive-in in 1954, told a local NBC News affiliate that the levy is “really frustrating” because low-margin businesses will feel “the most pain.” Restaurateur Ethan Stowell isn’t thrilled with the idea of writing a check to the government rather than directly helping the homeless.
How Much Will Tax Cost Players?
In total, just under 600 businesses would be subject to the new tax. Among them are 77 retailers, 78 construction companies, and 14 food and beverage establishments. But the key question now is: how much will it cost the major players every year?
Amazon, which will pay a bulk of it, can expect to pay $11 million per year to the city. It is already cutting hundreds of jobs from its head office, in addition to finding a second headquarters.
It is unclear as to how many employees Starbucks maintains in Seattle. Today, the coffee giant has roughly 10,000 employees in Western Washington. Let’s be conservative and say Seattle employs 5,000 full-time workers in Seattle. This means the company can expect to dole out about $1.4 million.
Of course, these two massive brands can afford it, but what about the other companies enduring stiff competition, thin margins, and declining revenues?
Experts warn that grocery stores will be hit the hardest. It is true that they generate significant revenues and have numerous employees, but their profit margins are some of the thinnest in business. Is the socialist goal to starve everyone so more people are dependant on the state?
The Seattle Times is another entity that will face the levy despite being in an industry that is collapsing.
Arrogance of Seattle on Display
The supercilious and fatuous Seattle city council sent a clear message to successful companies, as well as to future entrepreneurs, this week: your money belongs to them, and they’re only allowing you to keep portions of it. Kshama Sawant and her socialist cohorts are waging a war on capitalism, the very model that permits politicians to experiment with the latest progressive boondoggle. By the time they’re finished, like Connecticut and Maryland, Seattle will be in ruins and there won’t be too many affluent individuals or companies to bail them out. Perhaps they just have to learn their lesson the hard way: socialism never works because you eventually run out of other people’s money.
Do you support a jobs tax? Let us know in the comments section!
Andrew has written extensively on economics, business, and political subjects for the last decade. He also writes about economics at Economic Collapse News and commodities at EarnForex.com. He is the author of "The War on Cash." You can learn more at AndrewMoran.net.
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