Amazon plays hardball with Seattle over "eat the rich" tax

As other cities lobby to bring Amazon to town, the retailer is finding less love these days in Seattle, its home turf.

Amazon this week abruptly pulled the plug on a large expansion in Seattle, saying it would await the outcome of a proposed business tax 

The tax would pay for affordable housing and homeless services in Seattle, which last year had the third biggest homeless population in the U.S. after New York and Los Angeles, according to HUD. Amazon's growth is seen as one factor in skyrocketing housing costs in the area.

The tax would apply to businesses that gross at least $20 million a year in Seattle starting in 2019. About 600 businesses would have to pay 26 cents for each hour an employee works, amounting to about $500 for each full-time worker. The tax would raise $75 million a year in total. 

Four of nine City Council members signed the draft legislation released late last month, and a fifth signaled strong support, arguing it would help offset Washington state's "upside-down tax code that puts an inequitable accumulation of wealth ahead of the needs of everyday people."

Three-quarters of the money would fund nearly 1,800 affordable housing units in Seattle, and the rest would fund services for the homeless, according to the draft, which the council was set to vote on May 14.

Amazon employs more than 45,000 in Seattle, and would face a $20 million to $30 million annual tab from the tax, and possibly more when the payroll tax comes.  

"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 evaluating options to sub-lease all space in our recently leased Rainier Square building," emailed an Amazon spokesperson.

Amazon's move took city officials off guard, and the outcome of the tax proposal seemed far from clear.

While the mayor's office would not say whether she was supporting the proposed tax, she seemed to indicate hopes for a compromise.

"I'm deeply concerned about the impact on a large range of jobs - from our building trades, to restaurant workers, to nurses, manufacturing jobs and tech workers," Jenny Durkan, Seattle's mayor, said of Amazon's decision in an emailed statement. 

"At the same time, our city must urgently address our homelessness and affordability crisis," she added, vowing to work with council members and local leaders to address the problems.

The issue has emotions running high, with construction workers on Thursday reportedly shouting down a member of the City Council who supports the tax proposal, chanting "No head tax, no head tax."

The Seattle Metropolitan Chamber of Commerce, of which Amazon is a member, opposes the proposal, calling it a "misguided tax on jobs."

Amazon also has the support of the editorial board at the Seattle Times, which calls the proposed tax "a symbolic 'eat the rich' gesture," which it contends would hurt workers.