Golden Goose to Emerald City: Drop Dead

Seattle homeless person. Photo credit: Crosscut

By Stephen D. Haner

The brief snippet on the telly that caught my attention showed a massive Seattle office building being developed by Amazon, and the report was that construction is slowing because the company might start reducing its footprint and headcount in the Emerald City of Oz due to yet another Occupy Wall Street-inspired tax plan. It is actually called A Progressive Tax on Business, and a Progressive Revenue Task Force created it.

It didn’t take long to confirm the story about the construction project halt, or to gather details about the City Council proposal itself and the national firestorm it has started. The legislation is worth a read for the truly wonky because of the long list of whereas clauses used to justify taxing the gross payrolls of any company with annual revenue above $20 million. In Seattle, gross revenue of only $20 million qualifies you as a little company, apparently, worthy of nurture. One more buck and bam.

The tax amounts to 26 cents per employee-hour, with a goal of extracting $75 million which is supposed to alleviate homelessness with the construction of new affordable housing units. In 2021 it becomes a straight 0.7 percent of payroll.  Moving out of town won’t totally save local businesses from tax. “C. The tax applies to businesses with employee hours worked inside the City regardless of whether the place of business is located within or outside the City.”

My favorite line in the Council’s own advocacy piece for the proposal is: “Why does homelessness seem to be getting worse as the city spends more to address it?” You can’t make this stuff up, folks.

City and county personal income taxes are imposed in several areas of the United States, but I could not find anything comparable to this – an excise tax per hour on every single hour worked by a company employee, janitor or white shoe lawyer.

The tax policy discussion on this writes itself. Of course the 26 cents comes out of the next raise or benefit adjustment the company was planning – it has to.   With so many competitors exempt, it will be hard to raise prices. And as my students can all recite now, businesses do not pay taxes, they get the money from ________ (multiple choice:  employees, customers, stockholders or all of them). Tax employee hours and you get fewer _______ (correct answer:  employee hours.)

But what also caught my eye was the gutsy power-play threat from Amazon. I know many of you will say: This is another message to Amazon to move to a lower tax, business-loving environment such as Virginia. But if Amazon comes, and brings the jobs and investment reportedly attached to HQ2, will anybody be surprised when it starts to throw its weight here, too?

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25 responses to “Golden Goose to Emerald City: Drop Dead

  1. Hilarious in so many ways. I love the fact that nonprofit companies are exempt — as if they didn’t have enough tax breaks already. Clear signal to the private sector: You suck.

    Actually, you can make an argument that the tax will help address homelessness. Higher taxes will drive businesses out of Seattle. The businesses will take employees with them. Demand for housing will drop. Housing will become more affordable. Therefore, many homeless who couldn’t afford housing before now will be able to. Voila!

    • Your economic theories are bunk. The real answer is to raise the minimum wage from $15 / hr to $30 / hr. Therefore, when the homeless people get jobs they’ll be making $60,000 er year. Hell, raise it to $60 / hr and everybody will be able to buy their own homes. This is easy.

  2. Virginia’s conservatives should want locality-based income taxes in the Old Dominion. I expect the Democrats to control the House of Delegates and Senate in 2019. That will be a clean sweep with Ralphie Flip-Flop only too happy to sign new taxes into law. It will be fascinating to see how quickly the die-hard conservative Dillonistas switch to home rule heroes once the all powerful state is run by liberal Democrats. In the meantime, lowering the statewide top income bracket to 4% and allowing jurisdictions to add up to another 3% will preserve the possibility that some parts of the state will remain moderately taxed places.

    As for Seattle … once they came up with a $15 per hour minimum wage could punitive taxation be far behind? As far as I can tell, you could call Portland Berkeley North and Seattle Berkeley Way North. That only makes sense since the liberal paradise of Berkeley / Oakland is working out well for its residents.

    As for Amazon HQ2 … bet on Atlanta. Virginia is far too politically and culturally backward (even compared to Georgia) to attract Amazon.

  3. Back in the 80s politicians knew how to deal with people in their cities they didn’t want in their cities. Washington, DC marched prostitutes over the Memorial Bridge into Virginia and Arlington admitted marching homeless people into DC. While neither of these actions fixed the underlying problems at least everybody involved got some exercise.

    http://articles.dailypress.com/1989-07-27/news/8907270335_1_washington-mayor-marion-barry-police-officers-prostitutes

  4. I don’t think homelessness is really connected to housing affordability.

    What happens when someone actually does have a job but it won’t be enough for “affordable” housing – they commute… not abandon their job and live on the street…

    We’ve got about 50,000 of those “homeless” folks going up and down I-95 every day between their job and their “affordable” home…

    Homelessness is fundamentally not related to “affordability”

    GEEZE!!!!

  5. I do not agree that laissez-faire capitalism is always the way to go. Here in Virginia, conservatives make it seem so. The rich are always right. Labor is always wrong. Having compassion for people cut off from a big income boom is stupid (which seems to be the tonality of this commentary).

    The fact is that different parts of the U.S. have different attitudes about social mores. I have never been to Seattle but that’s for damned sure in the Bay Area. Being progressive tends to attract the brightest people. Take labor. I essentially moved from Virginia with a brief stopover in DC for Chicago where unions are respected and considered a key part of the economic scene. Ordinary workers don’t stand for a lot of management crap and their “place” as defined by the bosses, especially in NOVA, is that it is either driven by direct government spending or is a spinoff from government funding.

    Meanwhile, both homelessness and affordable housing are indeed big issues and are not directly as LarrytheG says. Some right wingers out there would like them to be. But if a new business comes in with high if not overly-inflated salaries, you have to consider what happens to people who’ve been living there for years and suddenly their rent skyrockets and then they can’t afford other housing anywhere close to their jobs and social life. Of course, they should be considered. If there’s a tax that must be endured by the likes of Amazon, then too damned bad. I’m sure they will manage.

    I just hope the idea isn’t “bring HQ2 to Virginia because we screw over our work force.”

    • I have never lived in Seattle but I’ve been there dozens of times. I can’t really say that the rising real estate prices caused the rising homelessness. Maybe. Or, maybe as Seattle became more liberal with the influx of outsiders it also became more hospitable to homeless people. So, homeless people relocated there. DC is undergoing a similar escalation of real estate prices as neighborhood after neighborhood gentrifies. I’m in DC 5 – 6 times a month and it doesn’t appear that there is a homeless crisis in DC. Or, at least, no more of a crisis than before the broad based gentrification.

      As far as unionization, I’m not sure that the Amazon headquarters is a particularly good candidate for labor organizing. The real target ought to be in the distribution centers and logistics chain where Amazon has a very checkered reputation with regard to treatment of employees.

      Like so many West Coast tech CEO / millionaires – billionaires Jeff Bezos is a two faced liberal. He curries favor with his lefty pals by bashing Donald Trump but opposes unionization of Amazon and is even seen as a threat to the Washington Post’s existing union (see attached link). That’s the trouble with today’s left, they say one thing but do another, Bernie Sanders is a millionaire after his book deal and his wife is under investigation for shady land deals, the Clintons clearly felt fine using the Clinton Foundation to enrich themselves, Bezos abuses his employees, Terry McAuliffe has a long list of crony capitalist dealings done to enrich himself at public expense, Tim Kaine claims to support the little guy but was only too happy to take a free vacation at a multi-millionaire’s private Caribbean island before re-appointing the donor to a prestigious state position.

      Say what you want about the policies of Jimmy Carter or George W Bush … neither of those guys impressed me as focused on self-enrichment from their elected offices. It seems to me that going back to the days of demanding honesty and no self-dealing from our elected officials would be a good idea.

      https://www.huffingtonpost.com/entry/washington-post-jeff-bezos_us_59df9245e4b00abf3646fff9

  6. re: “the unions”.

    that was how a good part of the minimally-educated American labor force got job-trained through apprenticeship and got quality health care and retirement benefits. Even kids that went to “bad” neighborhood schools had an opportunity to learn a trade, make a living, own a house and car and help their own kids to a better life.

    So that same right wing that can’t distinguish the difference between homelessness and affordability – can’t seem to figure out how if you
    kill the unions – you create other systemic problems for which they seem to have no answer other than “tough guano, you’re in your circumstance because you are lazy and ignorant… not our problem”!

    All the right can focus on is how wrong it is to charge union dues to those that don’t want to pay them and the dues get donated to politicians who support unions… GAWD O’mighty..

    You wanna see how Conservatives govern” No problem Just look at the vast majority of urban areas with jobs – they’re BLUE – like NoVa is and the GOP’s domain is the rural – that’s the worker ecosystem Conservatives own.

    Seattle is little different form a lot of similar sized cities like San Francisco, Austin, Atlanta, etc… who have both homeless and affordability issues – that they do try to deal with – in typical liberal fashion which does have it’s own issues also but the difference is they look for solutions and Conservatives look for blame and excuses.

    • “All the right can focus on is how wrong it is to charge union dues to those that don’t want to pay them and the dues get donated to politicians who support unions… GAWD O’mighty..”

      The First Amendment to the US Constitution, cornerstone of the bill of rights, is widely seen as guaranteeing both a right of free association and a right not to associate. When a state passes a law that allows a union to mandate membership in the union as a pre-requisite to employment at certain companies or government agencies that state has violated the individual’s right not to associate with those in unions.

      If you want to understand why some people might not want to associate with unions I’d refer you to an iconic figure in American union policy … Jimmy Hoffa.

      Nothing stops unions from organizing in right to work states. They just can compel membership in the union as a pre-requisite to employment. That’s call freedom of choice Comrade Larry.

      • When you join a Union you KNOW the terms that come with the benefits.

        You do not have to join a union!

        It’s a little like an HOA!

        • Au contraire. Absent a right-to-work state, unions can make workers join the union or pay a dues equivalent even when they are part-time workers. When I was in high school and college, I worked for Wards in a catalog house doing stock work. The Company had union representation through the Teamsters. I worked fulltime only during summers and Christmas break and part-time the rest of the year, except from mid-February to April when all the part-timers were laid off after inventory. Yet I had to pay full union dues when I worked part-time. Also, the dues accrued when I was laid off. The only other alternative was to pay a fee of $75 when I returned to work.

          Every year in April when I returned to work part-time, my checks would include back-payments of union dues. I remember a few checks that were for zero between Social Security and back dues, I’d work a good week or more for nothing.

          Unions are nasty things. Even my Democratic-voting wife wouldn’t let our kids join the Union when they worked at Giant part-time.

          We need a national right-to-work law. Let unions compete for membership.

  7. Recently returned from San Francisco. Homeless and mentally ill homeless people roam the streets, which are at least as grungy as New York and probably worse.

    I got the distinct impression the City is retreating from its ultra-liberal attitudes towards homeless. There were instructions in our hotel room as to who to call if we are panhandled or see people sleeping in doorways, etc. Also, it appears to be against the law for someone in a store to panhandle or ask for someone to buy him/her food. In several stores, when such requests were made, clerks called security and the beggar was quickly escorted out the door.

    • Was on vacation with my family in SF for a few days around New Year’s. We hired a “guy with a van” to give us a tour. He’d lived in Sf all his life (he was about 60). Fascinating story about how much the city has changed, changed again and then changed some more. Reminded me a bit of NoVa. Kind of a steady, sleepy place until an influx of outsiders came in search of economic benefit. Once that happened – lots of things changed.

      • We went to see a program at the Golden Gate Park science center on coral reefs. Very interesting except when the live presenter told us we should seriously think about not eating meat or at least red meat to reduce our carbon footprint. So much for personal choice.

        We also walked through Haight Ashbury and GGP on 420 Day – the first since California legalized POT. A smoky haze everywhere, something that doesn’t bother me. But later I learned SF has a ballot question to ban outdoor vaping. A liberal city except when political correctness demands to the contrary.

        I actually felt as if I was in a small town in Alabama. The ultra right and ultra left are almost mirror images of each other. It was actually nice to return to the more tolerant climate of Fairfax County.

    • San Francisco for all it’s faults is a prosperous city with a lot of good paying jobs… as well as panhandlers who are attracted there… because those panhandlers would get terrible treatment in rural areas!

  8. Yeah,
    Family and friends have been an SF draw for years starting back in the 1970s. A lot of the old spirit has been destroyed by the techies who really weren’t part of it.

    • That’s part of what my tour guide said. However, before the techies were the hippies and before the hippies SanFrancisco was controlled by few families who, generation after generation, provided the political and corporate leadership of the city. Kind of a Boston / Chicago West. The good thing about the hippies is that they had very different social values than the traditionalists but lacked the money to just buy everybody out. The techies have values very different from the hippies but they do have the money to just buy out much of the city.

      I think a modern history of SanFrancisco (starting in about 1950) would be a fascinating book to read.

  9. Someone I know well just sold a starter-sized house here in Richmond for a ridiculous price, a reflection of the shortage of supply. There are all sorts of economic barriers to building new affordable housing – for sale or rent – and somebody from the home building industry could do a better job of listing them. People who buy derelict properties and renovate them obviously need to fight the same bureaucracy, and recover the investment and earn a profit. I know the two renovated-space condos I’ve lived in here enjoyed major tax reductions for about ten years – does that work for single family homes? The solution has to be bigger than just raising taxes on a select group of easy-target businesses to build a few more subsidized units that will just reduce a waiting list, which fills back up.

    Ironically, as I noted, the authors of the Seattle tax plan admit that what they’ve been doing hasn’t worked. And now they are going to do more of it.

    • It’s seems like you have to subsidize something. Affordable housing in the city, mass transit from the suburbs to the city, unemployment, etc. I have never understood Jim Bacon’s reluctance to subsidize mass transit if it allows people of limited means to live where they can afford to live but still get to the good paying jobs in the expensive urban areas.

  10. Virtually every major urban area in the US has 3 problems.

    1 – lack of affordable housing
    2. – a crap load of people using the interstate highway system to commute
    as far as it takes to find an “affordable” home.
    3. – homeless folks, beggars, societal scum leeching off of whoever they can

    1 and 2 are related… 3 is not…

    But I stick with my original premise.

    Most large urban areas are run mostly by pragmatic liberals – who work to find solutions and solve problems inherent to the city and Conservatives spend their time blaming “leftists” and the poor for causing problems in the cities without realistic governance model of their own that actually works. No surprise that their bastion of support comes from Rural who loves the message that Conservatives speak more so than their actual governance.

  11. Yes we did road trip San Fran to Portland to Seattle two years ago, stopping at Yosemite and the redwoods etc.

    Homelessness is regional issue. Talking about it on the radio all the time out there. I guess the weather and other factors attract the homeless. Portand I think has the most issue, but widespread.

    • @Tbill – we are headed to Yosemite and region this summer. Advice?

      • We had a slightly difficult mountain hike due to a little snow to see the Giant Sequoia’s. That was because the more accessible Mariposa Grove has been closed for repairs since 2015. Should reopen June_15 this year, so you want to see that. Make a dinner or lunch reservation in the Yosemite Lodge with window towards the falls. We went in early April so crowds were manageable and water flow was good. We could not find a room in the Park but we stayed at I think it was Yosemite View Lodge is just outside the park.

  12. Having served on a Fairfax County subcommittee on affordable housing, I learned there are basically two types of homeless (simplified, of course). Short-term homeless that can occur when a family splits up, a job is lost, a parent is jailed, a party is evicted, etc. My general understanding is that most of these people get housing assistance, often temporary, reasonably quickly and often adjust successfully to the disruption and return to the normal housing market. And, of course, the availability of affordable housing often provided as part of proffers or by charitable organizations sometimes funded by governments in part, certainly helps. The subcommittee was looking at ways empty commercial buildings might be repurposed for lower-income housing.

    The harder problem is long-term homelessness that is often accompanied by mental illness and/or serious addiction. Often these people are hard to find and may not wish to be helped. That one is beyond my pay grade. Another type of longer-term homelessness is found among people whose home is elsewhere but they are working in the Metro area, but cannot afford housing so they camp in parks and other locations. Adding affordable housing such as SRO could help. Fairfax County attempted to address the latter, but in usual County practice ignored what other Virginia localities have done – help establish SRO housing in or near commercial or industrial areas near bus lines and local shopping. Fairfax County proposed to allow SRO housing in virtually every residential district; upset virtually every homeowners group in the County; and saw the program killed by the BoS.

  13. @TMT – in NEITHER case is “affordable” the core issue though with homelessness and confusing it or conflating homelessness (of any kind) with “affordability” in the convention vernacular is not really understanding and dealing with the problem.

    Most major cities that have some function that responds to homelessness are not connected in any way with the “affordable housing” issue – which basically is people who DO have jobs and ARE functioning “normally” in the sense that they are not without shelter at all. they want BETTER shelter … for the money they DO make from their job.

    I don’t know if the Seattle folks confused it or not but certainly any analysis that confuses the two issues is not really on point.

    Again, it gets back to one’s political leanings and how they deal with stubborn issues that have no perfect solutions. Do you just give up and walk away or do you try to do something – even something that is flawed – perhaps in the way Seattle’s approach is?

    Sure – talk about how Seattle’s approach is “wrong” but don’t stop there – go on to the part where one says ” they should do THIS instead”. THAT’s the difference with political leanings in my view. You take on the problem or you walk away making excuses and blaming others for being the problem , etc.

    This is the challenge for most urban areas – and we DO SEE the political leanings of those that do govern most urban areas… The are not exactly rock-ribbed Conservatives.

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