Seattle’s new ‘head tax’ blasted by city’s mega-corporations

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Seattle tax hike: Think tank fights back with lawsuit

The Seattle City Council wants to tax the rich but the Freedom Foundation is suing claiming the hike is unconstitutional

A new tax approved by the Seattle City Council has triggered a fierce war of words between the liberal city and its behemoth corporations usually known for their progressive outlook.

Starbucks and Amazon are now blasting the decision to slap a new “head tax” on businesses to pay for homeless services and affordable housing -- saying the government's own lack of efficiency is to blame for the city’s woes.

“The city does not have a revenue problem – it has a spending efficiency problem,” Drew Herdener, Amazon vice president, said in a statement. “We are highly uncertain whether the city council’s anti-business positions or its spending inefficiency will change for the better.”

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The Seattle City Council on Monday passed a plan to tax businesses making at least $20 million in gross revenues about $275 per full-time worker each year. That “head tax” is estimated to raise about $48 million -- which authorities are marking for housing and homeless services.

“We have community members who are dying,” Councilmember Teresa Mosqueda said before the vote, according to The Seattle Times. “They are dying on our streets today because there is not enough shelter” and housing.

But the two corporate behemoths reacted angrily to the news. Nearly 600 employers — about 3 percent of all Seattle businesses — would pay the tax starting in 2019. Amazon said it is being forced to question future growth in the city, and noted that revenue was increasing quicker than the population increase.

Amazon is headed by Jeff Bezos, who also owns The Washington Post. The Internet giant also has drawn criticism from President Trump, who has complained Amazon does not pay enough taxes.

Councilmember Lorena Gonzalez slammed Amazon, saying "their tone in this message that is clearly hostile toward the city council is not what I expect from a business who continues to tell us that they want to be a partner on these issues."

Seattle-based Starbucks, which regularly touts its progressive values, accused the council of ignoring the plight of children who have to sleep outside.

"If they cannot provide a warm meal and safe bed to a 5-year-old child, no one believes they will be able to make housing affordable or address opiate addiction," Starbucks' John Kelly said in a statement.

But the proposal itself had actually been reduced, with the initial pitch putting the tax at $500 per head, in order to pick up enough votes to pass and avoid a mayoral veto.

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The Associated Press reports that the Seattle region had the third-highest number of homeless people in the U.S., despite the city spending $68 million on combating homelessness last year.

Head taxes are extremely rare in the U.S. and the ones in place are a fraction of Seattle’s proposal. In Denver, there is a $50-per-year tax for a full-time employee, while Chicago Mayor Rahm Emanuel scrapped the Windy City’s tax after calling it a job killer.

Seattle once had a $25-a-year per head tax, but killed it in 2009 because leaders said it sent the wrong message to businesses during the recession.

Fox News’ Dan Springer, Hillary Vaughn and The Associated Press contributed to this report.