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00000181-fa79-da89-a38d-fb7f2c120000Seattle is in the midst of a struggle with affordable housing and a rising homelessness crisis. The City Council is considering a proposal to have large businesses help pick up the tab on these issues with an employee tax, more commonly known as the head tax.The tax would force big employers to pay the city of Seattle for each employee and every hour worked. It's expected to raise $75 million.

Seattle Mayor Jenny Durkan proposes alternative head tax plan

Jenny Durkan
KUOW Photo/Megan Farmer
Seattle mayor Jenny Durkan

Seattle Mayor Jenny Durkan has proposed a compromise tax on large businesses that would pay to ease the city’s affordable housing shortage and homelessness crisis.

Amazon had balked at the mayor's initial tax proposal and put a halt to construction on a building downtown. 

Durkan’s new plan would roughly halve the employee hours tax proposal that’s been discussed by council in recent weeks. It would reduce the tax to $250 per full time employee, per year for for-profit companies that make at least $20 million annually. 

The mayor’s smaller proposal comes ahead of a Friday morning committee meeting in which council members are set to discuss the head tax plan that’s caused outcry from residents and dozens of local businesses, including Amazon.

The original, larger head tax would cost large businesses roughly $500 per full time employee, per year and is estimated to raise $75 million per year. The mayor’s office said her alternative would raise more than $40 million per year.

Both plans would funnel revenue towards building affordable housing and adding homelessness services and shelters. The mayor’s office did not offer details on spending Thursday. The larger head tax plan currently calls for roughly 75 percent of revenue to go towards building more affordable housing. 
The mayor’s plan would also need to be renewed after five years.

“From the beginning, I’ve believed that there was a path forward to lift up those left behind while protecting jobs,” mayor Durkan said in a statement. 

“Working with people across our City, we have reached a proposal that has the support of four Councilmembers and a range of stakeholders. Like Seattle residents, we will demand transparency and accountability and it is an important step to address our City’s homelessness crisis and support our residents who are struggling,” Durkan said. 

Five council members currently support the larger head tax plan. However, the mayor’s office said council members Rob Johnson, Sally Bagshaw, Bruce Harrell, and Debora Juarez support her alternative.
A six-member majority is needed to prevent a veto from the mayor, five members of the council must approve a measure for it to pass. 

Council member Mike O’Brien, a co-sponsor of the larger head tax legislation, said Thursday evening that he remains committed to that piece of legislation. He said he’s willing to look at the mayor’s proposal and he’s willing to be flexible. But he said urgent action is needed to address the city’s affordable housing and homelessness crises. 

According to Durkan’s office, Monty Anderson with the Seattle Building Trades said Amazon would resume construction on their Block 18 project if the compromise deal moves forward. 

Amazon announced last week it was pausing construction downtown pending a vote on the head tax.

KUOW reached out to Amazon for comment, but the company did not immediately respond with a comment about the new proposal.

O’Brien said Thursday that Amazon’s support for the mayor’s proposal would not change his vote. 
“I have a real problem with the idea that the largest company in town gets to dictate the taxes that we as a community decide we want to levy to fund the things we need,” O’Brien said. 

He said Amazon is a large employer and should be at the table, but he said it’s problematic that the city relies so heavily on a single employer. 

O’Brien said, whichever proposal moves forward, the need for additional resources is clear. 

“There’s just no way that we can reduce this crisis without additional resources. And I don’t think it’s fair to raise the sales tax, we don’t actually even have sales tax authority, I don’t think it’s appropriate to go after property tax, we just don’t have great tools and I think the employee hours tax as we’ve set up is a fair tool,” he said. “We need to do something, we need to do it immediately, and frankly it needs to be significant... we have to go big, not go small,” he said. 

A final vote on the so-called “head tax” is expected Monday. 

Year started with KUOW: 2015