When Amazon announced this past week it was adding thousands of jobs — only not in its hometown Seattle — it prompted yet more rounds of freaking out around here.
Except once again, it seems we’re panicking about the wrong things.
“Business groups blast Seattle council over payroll tax,” reported the Puget Sound Business Journal, noting the tech giant was expanding in New York, Denver, San Diego, and some other cities, with Seattle “noticeably absent from the list.”
It was referring to the new tax on salaries above $150,000 at large companies, passed in July by Seattle. It goes into effect next year and is earmarked to pay for affordable housing, coronavirus relief and support for small businesses.
“Should this tax remain in effect, Amazon is just the first of many companies that will make decisions to relocate employees outside of Seattle,” said the Downtown Seattle Association.
“Tax everyone away,” one small business owner chided Seattle on Twitter. “This will effect many businesses when Amazon leaves, including mine.”
Is Amazon leaving? I don’t know — the company is famously opaque about its plans, though it has suggested in recent years that what’s really going on is that it had already maxed out its footprint in Seattle. Considering how overwhelmed South Lake Union was by growth before the pandemic hit, that seems understandable and not even controversial.
As for the taxes, though: Why in the world would anybody move to New York if you’re looking for lower taxes?
New York City is one of the few in the country that has a special municipal income tax, city corporate franchise tax and a city capital gains tax (we have none of those). This is in combination with state versions of those same taxes (we have none of those, either). In all, the Tax Foundation this year rates New York as the 49th-lowest business tax climate out of 50 (only New Jersey is worse). Our state ranks 19th (though this ranking was done before Seattle’s new payroll tax takes effect, so we’ll have to see how that changes things).
Other cities on Amazon’s “escape from Seattle” list also have extremely high taxes. In San Diego, businesses pay California’s high corporate income tax (it ranks 48th, barely ahead of New York). Denver has, of all things, a dreaded head tax, $117 per worker per year. This is the very type of tax that supposedly got Amazon so riled up when Seattle flirted with one a few years back.
The point is, Amazon is obviously not fleeing taxes with these moves; with New York especially, they are running full tilt into ever higher ones. New York is also the city that rebelled against granting Amazon multibillion-dollar tax breaks, after protests there against corporate welfare. Yet here Amazon is spending $1 billion on an office tower for 2,000 workers on Fifth Avenue in Manhattan anyway.
So what’s going on? Put another way, what does Amazon really want?
They told us right in their statement about the moves: “These 3,500 new jobs will be in cities across the country with strong and diverse talent pools.”
That’s the whole game: Amazon is chasing talent. I’m not saying they don’t care about taxes, of course they do, but it’s now been proven that taxes are not their primary concern. The company swallowed its pride to go back to super-high-tax New York even after a messy breakup because New York is awesome, and that’s where talent wants to live.
“So much for the end of the city and the death of the office,” quipped urban scholar Richard Florida in response to Amazon’s moves.
We need to buck up a little, Seattle. No doubt we’re going to struggle to recover from COVID-19, the damage caused by recent rioting and our other ongoing urban problems (which the payroll tax was designed to address).
But getting cheap is not the way to make things right. Amazon just told us that with its actions. It’s to nurture more young talent. The best way to do this that benefits everyone — and not just tech behemoths seeking workers — would be to dramatically boost the state’s university system. (I’ve argued for years that with our state’s growth, there is need for an entirely new university.)
Instead, the flagship university we have, the University of Washington, was just ordered to forecast what an “all cuts” budget for this year would look like. UW said it would have to slash $55 million worth of course offerings, research staff and financial aid.
We cut off college opportunities around here, and it won’t just be Amazon decamping to other places.
Seattle, like all cities right now, is at an inflection point. We desperately need government and business to reach a detente. Certain City Council members need to stop demonizing businesses. But likewise, it’s well past time for big businesses and the wealthy to acknowledge how little they pay in taxes here relative to other places, and to step up to help.
It’s easy to freak out right now, especially any time mysterious Amazon busts a move. But let’s at least freak out about the right things.