Seattle is attempting to kill its golden goose: Amazon

Seattle is attempting to kill its golden goose: Amazon
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Amazon’s search for a second headquarters city just took on greater urgency, and perhaps a new criteria: Find a location where the residents don’t resent you.

Seattle, the e-commerce giant’s hometown, just adopted a tax targeting the city’s biggest companies, with proponents chanting “Tax Amazon” to gin up enthusiasm for the measure. The bill levies a charge of $275 per worker on firms with revenues of $20 million or more per year, or 3 percent of the city’s businesses.

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The “Amazon tax," as it has been called, since the retail giant will pay about one-third the total, is somewhat less onerous than an earlier proposal that slapped a $500 tax on each employee.

 

Why target Amazon? Because the company has the effrontery to employ 45,000 people in Seattle, provide $250 million in state and local taxes, and, critically, has resisted union organization efforts. The latter makes Amazon a target, just as Wal-Mart has been for more than a decade.

The city council passed the proposal 9-0, citing the need for additional funds to fight homelessness. It was supported not only by advocates for that group, but also by service-worker unions that apparently expect some of the expected $47 million per year in revenues to flow in their direction.

A non-binding proposal also passed that requires that 66 percent of the new funds be spent on affordable housing, 32 percent on emergency shelter, trash pickup, raises for service workers and other needs and 2 percent on administration.

Unions also were successful in defeating a proposed switch from a head tax to a payroll tax in 2021 to attack homelessness; that version would have caught up companies like supermarkets that employ union workers.

As Seattle’s biggest employer, Amazon is expected to fork over roughly $10 million annually because of the new tax. Faced with the earlier prospective $20 million charge, the e-tailer threatened to suspend expansion plans in the city.

Working Washington, a progressive union group founded by the Service Employees International Union (SEIU), accused Amazon of “felony intimidation.”

This is not how host cities are meant to behave. Especially when your largest corporate citizen is searching for the locale for a second headquarters, which might conceivably become a first headquarters.

Unhappily, it is exactly the tone increasingly set by progressives that want local and federal governments to provide an ever-expanding list of benefits like free pre-K, services for illegal immigrants and subsidized housing but don’t like the businesses that provide the means to deliver those benefits.

In effect, the liberal city council in Seattle, like its counterparts in New York and elsewhere, does not connect the dots between profits and prosperity.

Seattle’s decision to tax workers is not the first assault on corporate profitability, or on workers. In 2014, the city became one of the first to adopt a $15 minimum wage, pushed by labor unions like the SEIU.

Subsequent studies have shown the mandated wage increase actually hurt those whom it was supposed to help, as companies cut back the number of hours worked, thus reducing take-home pay.    

Seattle is the victim of well-intentioned but flawed liberal policies that will ultimately kill its golden goose. Out-of-control spending, zoning demands by the environmentally concerned (that is, nearly everyone in the hipster redoubt), panicked labor unions and Democrats’ increasing anti-business campaigns combine to provide a toxic brew, not confined to Seattle.

Let’s start with Seattle’s management. The city’s spending to combat homelessness has soared, reaching $63 million this year in programs and $100 million for affordable housing. Nonetheless, there are now 11,600 people without shelter in the city.

According to the Associated Press, the Seattle region had the third-highest number of homeless people in the U.S.

Overall city spending has skyrocketed, too. In the five years leading up to 2016, the city’s budget was one of the fastest-growing in the country. Wages for city employees totaled $1.1 billion last year, with almost half of all full-time workers making more than $100,000. The median income for residents is about $80,000. 

In the wake of the new worker levy, Amazon commented that, “City of Seattle revenues have grown dramatically from $2.8 billion in 2010 to $4.2 billion in 2017, and they will be even higher in 2018. This revenue increase far outpaces the Seattle population increase over the same time period. The city does not have a revenue problem – it has a spending efficiency problem.” So it would seem.

Others have noted that Seattle’s homeless crisis has been exacerbated by zoning restrictions that have prevented the building of new shelters. 

Meanwhile, labor unions are in decline, and no organization is more distraught than the SEIU. That group has spear-headed the "Fight for 15" initiative but has seen few benefits, largely failing in its efforts to organize fast-food shops or other retail outlets.

Ironically, as the minimum wage rises, workers may have less incentive to join a union. Nonetheless, declining membership has made union leaderships ever more aggressive across the country, and they still have clout with long-time allies in Democrat-led cities and states.

At the same time, there is a growing tendency on the left to scapegoat Big Business and our country’s most successful people for society’s ills. The folks at Working Washington likened Amazon’s threat to slow their expansion to the behavior of a “mob boss lording it over a company town.”

People marching in support of the tax last week carried signs saying “We need a revolution against the billionaire class” and “Unionize Amazon, Tax Bezos." 

Corporations have rarely stepped up to defend the benefits of capitalism and their own success, cowed as they are by social media attacks and growing animosity toward employers.

That is a miss, since it is business leaders who need to educate the public that their presence and their tax revenues allow good things to happen. Our schools do not make that case.

Amazon will soon pick the site for its second headquarters. They would do well to choose a locale demonstrably pro-business, preferably a “right to work” state that promises low taxes and light regulation. Maybe that would send a message.

Liz Peek is a former partner of major bracket Wall Street firm Wertheim & Company. For 15 years, she has been a columnist for The Fiscal Times, Fox News, the New York Sun and numerous other organizations.