Seattle council members on Tuesday plan to repeal its controversial head tax less than a month after it unanimously passed.
Mayor Jenny Durkan and council members on Monday sent out a joint statement announcing a special council meeting at noon on Tuesday, where they will vote on a bill that would repeal the head tax. Seven council members—all but Kshama Sawant and Teresa Mosqueda—signed onto the statement, well over the necessary votes.
"It is clear that the ordinance will lead to a prolonged, expensive political fight over the next five months that will do nothing to tackle our urgent housing and homelessness crisis. These challenges can only be addressed together as a city, and as importantly, as a state and a region," the joint statement said. “We heard you. ... Seattle taxpayers cannot continue to shoulder the majority of costs, and impacts."
The decision comes shortly after a business coalition that heavily lobbied against the tax gathered enough signatures to put the head tax on the November 8 general election ballot.
Adding the head tax to the November ballot also would have given city voters two separate measures that would raise taxes to consider—one for homelessness funding, which would affect top 3 percent of businesses, and one for education funding, which increases property taxes—potentially putting the 2018 education levy in jeopardy.
"I believe that repeal creates a good pathway for the ed levy," said council member Rob Johnson, who co-chairs the select committee on the education levy. The levy proposes a property tax increase to fund K-12 and higher education in a seven-year, $636.7 million package.
The head tax would have raised $47.4 million a year to spend toward affordable housing and homeless services as the city continues to grapple with its homelessness crisis. Effective in 2019, the bill would tax businesses making $20 million or more in taxable gross receipts $275 per full-time employee per year (14 cents per employee hour) and would expire in 2023 with an option for renewal.
Those decisions came after months of meetings with a progressive revenue task force and negotiations with the mayor's office, who pushed for a smaller head tax. Durkan and council members ultimately praised the legislation as an example of policymaking that heard all sides of the issue and came up with a solution.
Still, businesses who opposed any kind of head tax from the beginning condemned the bill as a tax on jobs, and some businesses began a campaign that would give voters the option to repeal the tax by putting it on the ballot. The coalition, calling itself the "No Tax On Jobs" campaign, has so far spent nearly $300,000 as of Monday morning, according to the Seattle Ethics & Elections Commission.
The campaign and Amazon's threat to halt construction ultimately changed public perception, and prompted council members to consider other options, council member Mike O'Brien told PubliCola. He said he anticipated an ugly campaign if the head tax were put to a vote.
"The prospects of what the next six months would’ve looked like...clearly the business community was prepared to spend millions of dollars if it took that," O'Brien said. "There’s a real possibility that even if we do everything right and win, we end up... spending millions of dollars, bruising each other up immensely, with no new revenue to address the problem."
The joint statement includes key supporters on the council who had been instrumental in the tax passing—O'Brien, Lisa Herbold, and Lorena Gonzalez all support the repeal.
Herbold in a statement blamed the Seattle Chamber of Commerce for misleading voters and said people sleeping outside "will pay the price of our listening to and acting on" that narrative. Gonzalez also criticized corporations and said she was deeply disappointed that "powerful and well-resourced interests have swayed public opinion."
This will be the second time the Seattle City Council repeal a head tax. The first time was in 2009 during an economic recession.
Mosqueda in a separate statement said she "cannot back a repeal without a replacement strategy" to fund housing and shelter for homeless people, calling the head tax debate a "flashpoint in Seattle's housing crisis." Mosqueda also said the council has already considered other solutions and can't wait months or a year for an alternative.
"We need dollars. We need it soon," Mosqueda said at a press conference Monday. "What we need is greater shared responsibility so that we can have greater shared prosperity. I think the (employee hours tax) represented that."
URGENT ACTION ALERT on Amazon Tax to build affordable housing: @SeattleCouncil will repeal the tax on big biz at noon tomorrow! This is a capitulation to bullying by Amazon & other big biz. This backroom betrayal was planned over weekend w/o notifying movement (incl. my office).— Kshama Sawant (@cmkshama) June 11, 2018
Check this story later for more updates.