Seattle repeals ‘head tax’ after backlash from Amazon, Starbucks

The Seattle City Council on Tuesday voted 7-2 to repeal a “head tax” on the city’s largest employers, granting a surprise victory to corporate giants such as Amazon and Starbucks just weeks after the council unanimously approved the measure.

The vote took place at a special meeting called by Council President Bruce Harrell and six other members of the nine-person Seattle City Council. Seattle Mayor Jenny Durkan also supported a repeal.

The council struggled to conduct the vote at the meeting’s conclusion as protestors chanted “stop the repeal,” drowning out councilmembers as they attempted to cast their ballot. Councilwoman Kshama Sawant, who cast one of two votes opposing the repeal, said the council was “bending to big business” and referred to Amazon CEO Jeff Bezos as an “enemy” of Seattle.

Originally passed on May 14, the measure required companies with annual revenue of $20 million or more to contribute $275 per employee annually toward efforts to combat widespread homelessness in Seattle. At the time, the city council said the “head tax” would raise about $50 million per year toward the development of affordable housing, homeless shelters and other outreach efforts.

“Today’s vote by the Seattle City Council to repeal the tax on job creation is the right decision for the region’s economic prosperity,” Amazon vice president and spokesman Drew Herdener said in a statement. “We are deeply committed to being part of the solution to end homelessness in Seattle and will continue to invest in local nonprofits like Mary’s Place and FareStart that are making a difference on this important issue.”

The head tax drew widespread opposition from local business advocates and several major corporations, including Amazon, Seattle’s largest employer. Critics argued the tax would discourage investment in the city and place an undue burden on companies that were already paying a fair share of taxes. The measure's supporters said large employers should pay the head tax because their presence in the city contributed to the rising cost of living.

“We welcome this move by the City Council and believe the best path forward is to implement the reforms recommended two years ago by the city’s own homelessness expert,” Starbucks senior vice president of public affairs John Kelly said in a statement. “Starbucks remains a committed partner to government officials, business leaders, and family service providers. Together we must work to bring families inside, once and for all.”

“No Tax on Jobs,” an organization that advocated for a repeal of the tax, told GeekWire Tuesday that it had amassed more than 45,000 signatures on a petition calling for the measure to be considered in a public referendum if it was not overturned. Amazon and Starbucks, which is also headquartered in Seattle, each provided funding to the organization.

The measure would have cost Amazon an estimated $12.4 million each year. The e-commerce giant employs roughly 45,000 workers in Seattle.

Last month, Amazon and Starbucks criticized the head tax in the hours after its passage. Other large businesses in the area, including Nordstrom, Boeing and Microsoft, did not comment publicly.