Starbucks, Amazon hit back at tax to fight homelessness

After weeks of continuous meetings, the city council of Seattle has decided to impose a tax on the biggest firms based in the city, including Amazon and Starbucks, to raise enough money to face homelessness. Amazon, which is considered the city’s largest employer, said that the decision would put future expansions in the region on hold. The city council voted for the tax unanimously, claiming that it will help raise $47 million to face the recent housing affordability problem due to the recent booming economy.

Reports by CBS News and the BBC provided all the information used in this article.

Local corporations claim such decisions will decrease the number of jobs. The vice president of Amazon said the firm remains anxious about the future and worries about the hostile approach of the city council when dealing with larger corporations. The vice president also questioned possible growth with the new tax burden. Starbucks accuses the city council of continuous spending and failing with no accountability.

Impact of the tax on Seattle’s businesses

The tax will be imposed on corporations with more than $20 million in sales annually, roughly $275 annually for each employee.

This means it will be imposed on 500 firms, including city-based corporations such as Starbucks and Nordstrom, a department store chain. It will also have an impact on technology giants such as Google, Apple, and Facebook, having a huge presence in Seattle. Seattle’s commerce chamber said that such taxes will not fix the problem. Also, Amazon has warned that imposing such tax will risk about 7,000 new jobs. Following the vote, Amazon announced it would build a new office tower as planned. However, they said that they now are evaluating whether to empty some space in the second office building to move the planned jobs elsewhere.

Big support for the council’s decision

The long debate over who is responsible and should solve the housing problem was sparked by Seattle’s economic growth with booming rent and an increase in homelessness.

Also, advocates claim that the region placed third on the list of the highest number of homeless people in the United States, with a record of 169 homeless deaths last year. Some members of the council were disappointed that they couldn’t get the votes needed to score a veto by the city mayor. Advocates say that businesses and corporations, who profited from Seattle’s prosperity and took part in increasing income inequality, should give back. The mentioned that other cities have imposed similar taxes, and also citing data that shows middle-class housing prices have skyrocketed to $820,000, and that more than 40 percent of renters are considered rent burdened, which means they spend about a third of their salary on housing.

Critics accuse the new tax of threatening the city’s economy and driving away many jobs. Council members, who give a proposal on Friday (May 18) out of committee, want firms and corporations to pay about $500 per full-time employee annually.