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?