Big businesses lend financial support to head tax repeal effort

The fate of Seattle’s controversial employee-hours tax on big businesses could be decided by voters in November, if an opposition campaign can secure enough signatures to put a referendum to repeal it on the ballot.

The Seattle City Council on May 14 passed a head tax of roughly $275 per employee for businesses reporting more than $20 million in taxable gross receipts, which is expected to generate about $47 million annually for affordable housing and homeless services; it’s slated to sunset in 2023.

The council had planned a larger tax of $500 per employee, but changed course when Seattle Mayor Jenny Durkan made it clear she would not support it and the council did not have the votes needed to avoid a veto.

Online retail giant Amazon, which Seattle City Councilmember Kshama Sawant singled out when campaigning for the head tax, had its share drop from $20 million a year to $12.4 million with the final approved tax. That wasn’t enough to keep the company, which employs about 45,000 in the Seattle area, from continuing to oppose it.

Amazon, Kroger (Fred Meyer/QFC), Albertsons, Howard S. Wright Companies, Starbucks and Paul Allen’s Vulcan Inc. have each pledged $25,000 to the No Tax on Jobs group that is gathering signatures for a petition that would put a referendum to repeal the head tax on the November ballot. The group has raised a little more than $350,000 for its campaign.

“This came together very quickly after approval,” said John Murray with the No Tax on Jobs campaign. “I got involved with them around the 18th of May, and that was when they kind of had a meeting of the minds, and then a volunteer group led by Saul Spady and James Maiocco got the petition and started gathering volunteers and collecting signatures.”

Murray is also part of the Opportunity For All Coalition, which is fighting the City of Seattle’s 2.25 percent high-earner income tax, but says the two organizations are separate.

Murray points to a KUOW report posted on May 29 as supporting the No Tax on Jobs’ claim that increasing spending for homelessness hasn’t been effective.

That report states spending on homelessness increased from $39 million four years ago to $63 million in 2018, and much of that was heavily dependent on Seattle’s “construction boom,” which the council has been directed to no longer be so dependent on because it’s unclear how much longer it will last.

“We’ve spent this money,” Murray said. “It’s not well accounted for. There doesn’t seem to be strong metrics in place to measure success, and the council’s response is, ‘Give us more money.’”

A new methodology was used by All Home for the 2017 Point-in-Time Count of people experiencing homelessness. It found 11,643 people were experiencing homelessness in King County, with 6,158 being sheltered and 5,485 unsheltered — that included 2,314 people living out of RVs and other vehicles. Just in Seattle, there were 3,857 people living unsheltered, and 4,665 with shelter, according to the report.

The 2018 Count Us In report that was released on May 31 shows a 4-percent spike in people experiencing homelessness in King County — 469 more than counted last year — and 15 percent more living unsheltered than in 2017. People living in vehicles increased 46 percent, according to the report, and people living in transitional housing decreased 17 percent.

The total number of people living unsheltered in Seattle counted on Jan. 26 was 4,488, up from 3,841 in 2017.

The No Tax on Jobs campaign also argues the tax targets job-creators at a time when the city should be encouraging economic activity. Opponents say the tax could push businesses to relocate outside the city.

“It just seems like every day gets harder to run a business in Seattle, and the more I learned and spoke with people, the more I felt this is not the right solution,” said Uwajimaya CEO Denise Moriguchi, who has been speaking out against the head tax. “Most grocery stores make pennies on the dollar, so we have to be very efficient with our spending.”

Uwajimaya has contributed just $5,000 to the No Tax on Jobs campaign, while the Washington Food Industry Association has put up $30,000 for the repeal effort.

Morgiguchi said she supports Seattle’s $15 minimum wage, because it helps employees.

“I can support that,” she said, “but it’s when you start adding on expenses, where I don’t see the benefit — it just keeps getting worse — I say, ‘Wait a minute.’”

The Uwajimaya CEO said if the tax does not get repealed, she expects prices to go up and hours and/or jobs to be cut.

“Uwajimaya is not Amazon, and I feel like we are getting lumped in with ‘Tax big companies,’” she said.

Murray said he fully expects the No Tax on Jobs group to gather the required signatures — around 18,000 — by the June 14 deadline, and a larger number than that is the target, so there is less chance of the petition being challenged.

Murray called a report by The Stranger that canvassers were spreading false information about the head tax a “hit piece.”

“We have a large volunteer army that has been deployed across the city. They are being supplemented with paid signature collection support,” Murray wrote in a follow-up email to MPT. “Given the extremely tight deadline the Coalition felt it prudent to cast a wide net and deploy every resource available.

“We have a volunteer operation that works with our team everyday on exactly what they can and can’t do. And what they can and can’t say as well as issues around safety.”

Pro-labor group Working Washington has set up a Bring Home Seattle website, backed by SEIU 775, that supports the head tax and encourages people not to sign the petition.

Find out more about the effort to repeal the head tax at notaxonjobs.com.