Amazon didn't bully the city into rescinding this destructive policy. The City Council prompted a popular revolt — but not the one its most extreme members hope for.
Last week, Seattle’s City Council repealed the Eastside Full Employment Act.
The misbegotten city tax on jobs, on top of the other taxes Seattle’s large businesses already pay, would have been a boon to the suburbs. They offer lower costs and less antagonism by politicians toward companies.
Now that the Council — facing certain defeat from a threatened referendum on the unpopular tax — reversed itself with haste, we’ll see.
Scanning the national coverage of last week’s retreat, the narrative of big, bad Amazon intimidating Seattle prevailed. For example, the New York Times’ headline read, “Seattle officials repeal tax that upset Amazon.”
Most Read Business Stories
- First flight of Boeing's new 777X delayed at least until the fall VIEW
- New Airbus leadership steps out in Paris Air Show, talks climate change and trashes Boeing
- A question at the Paris Air Show: Will Boeing CEO Muilenburg survive?
- Two Seattle law firms combine to form 180-attorney shop
- British Airways parent company delivers a massive vote of confidence in the Boeing 737 MAX
In fact, the Council’s reckless initial vote prompted a popular backlash against a destructive move, which sought more money for failed, unaccountable policies. As Lincoln said, you cannot fool all the people all of the time.
Amazon was almost tangential to the main drama.
The tech giant has already started spreading the growth of high-skilled jobs to other cities, such as Boston. HQ2, when it is announced, could become HQ1 if Seattle politicians continue their follies against the city’s largest employer. The jobs tax would have hastened that. But Amazon would have survived just fine.
The same might not have been true for some of the nearly 600 companies affected by the jobs tax. Many operate on very thin margins in highly competitive industries. At the least, the tax would have been a disincentive to hiring. At the worst, it could have prompted some to move or even fail.
I’ve never lived in a city this size that had nearly 600(!) large companies. It’s a sign of this remarkably diverse economy, not that Trumpists are secretly running a cabal to keep people on the streets.
The damage wouldn’t have stopped there. The jobs tax would have slowed overall growth — a pleasant reverie for some until the reality of collapsed revenues hits the city treasury. Small businesses, which depend on big ones, would be caught in cutbacks from their large customers. A defining stress test would come from a recession.
As I’ve written before, there’s not an evil Big Economy and a cuddly Small Economy. There’s only one economy.
Nationally, our tax system is deeply flawed.
Since the Reagan Revolution and repeated Republican victories, the mantra that taxes must always go down (and tax cuts “pay for themselves”) has dominated many statehouses and much federal policy.
Of course, the cuts didn’t pay for themselves. They stymied needed federal spending while helping to entrench the power of wealthy dynasties, concentrated industries and their moneyed influence over elections.
By contrast, from the 1950s through the 1970s — when America was “great” to some — federal tax rates on the wealthiest ranged from 91 percent to 70 percent. This coincided with the high tide of the American middle class and historic federal investments.
Yet last year Republicans in command of D.C. rammed through a $1.5 trillion tax cut for the wealthy and corporations (37 percent top rate on individuals). Centrists and liberals must win many elections to reverse the trend. We also need to tax carbon and transactions on Wall Street.
Washington’s tax system is deeply flawed, too, especially lacking an income tax. As a result, the relative tax burden is highest on low earners. Yet an income tax has been a consistent loser from voters in this supposed blue state.
As for Amazon, it deserves plenty of criticism. It began with a sales-tax-avoidance “business model” that helped bury many a competing bookstore that did pay to maintain the commons. This was rich considering Amazon’s business depended on the internet, which was birthed by federal tax dollars.
Enormous now, Amazon enjoys such marketplace power that it is arguably a menace to competition.
The same is true of Wal-Mart, ExxonMobile, AT&T, Google, Big Pharma, the big banks and many other giants. It’s bad for the economy, wages and healthy capitalism.
Yet this is the world as it is. I would rather that Amazon have its headquarters and 45,000 high-paying jobs in Seattle.
That’s far better than being a town scrambling for the scraps of warehouses or data centers.
And the city got this economic gift for virtually no incentives, while localities competing for HQ2 are prepared to spend enormous sums.
Too many Seattleites don’t know how good we have it — although the attempted jobs tax seems to have slapped many awake.
Whether they remain alert is the cynical gambit at least some at City Hall may be making. Eliminate the possibility of a ballot challenge to the tax, save my council seat next year, then bring back the jobs tax. It’s sad we have to wonder if that’s part of the calculus.
This is not to say idealism isn’t at work, or an honest debate to be had. Unfortunately, such a discussion is difficult with the screaming mob unleashed by the professional activists of the left. Or the magical thinking of such mottos as “Tax Amazon, housing for all.”
First, Amazon paid $250 million in state and local taxes in Washington state last year. Its growth has sparked construction that sent hundreds of millions in taxes and fees to Seattle. The boom of which Amazon is a conspicuous part so swelled city revenues that Seattle could spend ever larger sums on addressing low-income housing and the unsheltered population.
The question isn’t what business must do now to “solve” the problem, but why city leaders and bureaucrats were so incompetent in deploying the bounty they were given? Or seriously grappling with the dilemma of our generosity attracting ever larger numbers of street people and campers.
The “housing for all” part is equally delusional. Seattle is an expensive city. Not everyone gets to live in expensive cities. I want to live in central Paris. I can’t afford it, and don’t feel entitled to be given a flat there.
Tant pis. (That’s French for too darn bad.)
Like most successful big cities, Seattle has a liberal bent. Investment in education and livability, along with density, quality urban bones and tolerance make for a truly business-friendly mix. It also allows a certain latitude to experiment, to make growth more inclusive.
The jobs tax showed the limits. Rational thought prevailed. Will it stick around?