Dive Brief:
- Amazon stopped work on its high-profile construction project in Seattle over a proposed business tax that the city council said would fund help for the homeless, according to The Seattle Times and others.
- The company is planning on building a 17-story downtown tower in addition to leasing office space in a Rainier Square skyscraper, creating an estimated 7,000 jobs.
- Amazon has paused all work and said it might only sublease the skyscraper until the city council votes on a proposed "head tax" based on the number of a company's employees and their salaries. The new tax could raise at least $75 million.
Dive Insight:
This disagreement between Amazon and Seattle highlights the tightrope cities must walk when they have large employers, but also want to fund programs such as affordable housing and programs for the homeless by raising taxes or levying new ones. And it may give some pause to the remaining 20 cities shortlisted for Amazon's HQ2, that have been sworn to secrecy on the nature of their bids and will want to make sure the expected $5 billion investment and 50,000 new jobs come with corporate responsibility and equity for existing residents.
The program appears to have worsened the bad blood between the business community and the city government. On Twitter, Amazon Web Services CEO Andy Jassy described the proposal as "insane," and cited analysis from the Tax Foundation that described the plan as "bewildering" for targeting the technology industry.
Whether Amazon's latest gambit is a negotiating tactic or part of a wider trend, there should be more clarity once city council votes on the tax. Mayor Jenny Durkan said she hopes both sides can find common ground, while council member Kshama Sawant told the Puget Sound Business Journal that there is no evidence companies leave cities because of taxes.
"When you accept the logic that making sure a small measure of the wealth is getting used for social good is somehow going to have an apocalyptic effect on the overall economy, that basically means conditions will get worse for us all," Sawant said.
