Small businesses have closed because of the novel coronavirus crisis, workers are getting sick and bleeding income, Seattle’s budget is in trouble and two politicians say they have an answer: Tax big businesses.
City Councilmembers Kshama Sawant and Tammy Morales, who before the virus struck unveiled a plan to tax large corporations for rent-restricted housing and clean-energy upgrades, now say the money could initially fund virus-related relief efforts.
“The City Council should immediately pass an Amazon tax of at least $500 million to address the coronavirus-related emergency needs of our community,” Sawant said, describing cash assistance for workers impacted by the situation as a top priority.
“The needs are so great … and who has the money? Big businesses, even during this pandemic,” added Sawant, who sent an email blast Monday asking supporters to sign a petition on the matter.
It’s unclear how much appetite there is at City Hall and beyond for action on a new tax right now, with Seattle operating under a state of emergency and with the council holding its meetings by phone.
The city could collect more than $110 million less tax revenue than expected this year, Mayor Jenny Durkan’s budget director said Monday, because Seattle’s economy is in disarray and because the city is heavily reliant on taxes linked to business activity. Local giants like Amazon, Microsoft and Starbucks have taken some steps to assist small businesses and service workers, and Durkan has said the city’s relief efforts must be complemented by state and federal packages.
“Our region is just starting to see the full picture of what the coronavirus means for jobs and the economy, and the reality is that the recovery is going to take months,” Alicia Teel, spokeswoman for the Seattle Metropolitan Chamber of Commerce, said when asked about the Sawant-Morales plan. “We need our leaders at every level of government to work together and stay focused on getting our community and our economy through this crisis.”
Still, Sawant and Morales say a tax like theirs could raise $500 million a year and help residents recover from the virus outbreak. Their plan would impose a 0.7% payroll tax on about 800 of Seattle’s largest businesses, they’ve said. Sawant has been leading a campaign outside City Hall to build support for a ballot measure in case the council doesn’t act.
Durkan helped put together an alternative plan earlier this year, calling for a state bill that would allow King County to tax compensation to highly paid employees. Some business leaders demanded a provision banning Seattle from enacting its own tax, and the plan died in Olympia.
Morales said she spent last weekend trying to figure out who City Hall could provide people slammed by the pandemic situation with cash assistance. “The thing that made the most sense was this (her and Sawant’s) legislation,” she said.
The tax initially could fund emergency efforts and, in the long run, could improve Seattle’s tax structure, making the city less reliant on sales and property taxes that hit poor people hardest, Morales said.
“This is the right time,” she added. “We’re still working out how we could receive the revenue quickly and distribute the funds quickly, but the need to do this quickly is clear.”
Dayna Lurie, a political consultant who previously worked for U.S. Sen. Maria Cantwell, said she doesn’t expect a business tax proposal to win approval at City Hall anytime soon.
“The economy is already unstable,” Lurie said. “Even big businesses are starting to worry at this point, so instituting a new tax might not be the most productive thing to do at the moment.”
Since the outbreak, Amazon has been busy with orders from homebound customers. In reply to a request for comment, an Amazon spokesman shared a blog post about steps the company is taking: Blocking price gougers, hiring for 100,000 jobs, offering $25 million in grants to delivery drivers and donating $5 million to Seattle small businesses.
“I think they’re showing that they’re willing to help,” said Lurie, predicting the coronavirus emergency will lead to collaboration between City Hall and large corporations, rather than a new tax.
Katie Wilson, an advocate with the Seattle Transit Riders Union who supports the Sawant-Morales idea, is more bullish on its chances.
Because talks stalled in the Legislature, “the ball is back in the city’s court,” Wilson said. “With the coronavirus crisis creating an urgent need for revenue, I think we’re going to see some very interesting conversations in the weeks ahead,” she added.
Durkan has repeatedly said Seattle can’t deal with coronavirus impacts alone; the president and Congress have been debating options. Gov. Jay Inslee on Tuesday signed a bill into law that authorizes using $200 million in state budget reserves to fund the state’s response to the coronavirus.
Yet City Hall already has taken several steps. For example, the mayor announced a plan Monday to supply more than 6,000 families with supermarket vouchers.
Councilmember Teresa Mosqueda, who helped put together a short-lived Seattle big-business tax in 2018, hasn’t backed the Sawant-Morales plan. She wants to keep talking.
“I’m heartened by some of the conversations that I think Nick Hanauer is trying to initiate,” she said, referring to the Seattle-area venture capitalist who founded the think tank Civic Ventures.
“We need to respond to this crisis in a compassionate way and recognize that this isn’t about us versus them,” Mosqeuda said.
Civic Ventures spokesman Zach Silk said “no options should be off the table.”
“Decades of trickle-down policies have left hundreds of thousands of our neighbors vulnerable,” he said. “We must combat this looming economic downturn with solutions that match the scale of the problem.”